– Net income from continuing operations of $171 million or $0.72 basic earnings per share for the quarter –
– 20% improvement on an adjusted net basis(1) over the prior quarter –
– Finished the year with 37% share of HECM Reverse market(2) –
PLANO, Texas, March 06, 2024–(BUSINESS WIRE)–Finance of America Companies Inc. (“Finance of America” or the “Company”) (NYSE: FOA), a modern retirement solutions platform, reported financial results for the quarter and year ended December 31, 2023.
Fourth Quarter and Full Year 2023 Highlights
-
Net income from continuing operations for the fourth quarter of $171 million or $0.72 basic earnings per share primarily due to non-cash, positive fair value changes on long-term assets and liabilities combined with improved results from operations.
-
For the quarter, the Company recognized an adjusted net loss(1) of $20 million or $0.09 per share, an improvement of 20% over the prior quarter.
-
67% improvement in adjusted net loss in Retirement Solutions in the fourth quarter driven by higher revenue margin and reduced expenses compared to the prior quarter.
-
For the full year, our subsidiary, Finance of America Reverse maintained 37% share of the HECM Reverse market.(2)
(1) See the sections titled “Reconciliation to GAAP” and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
(2) Source: https://www.newviewadvisors.com/commentary/2023-full-year-hmbs-issuer-league-tables/; measured by HMBS issuance.
Graham A. Fleming, Chief Executive Officer commented, “2023 was a transformational period for Finance of America and I want to thank our entire team for their hard work and determination over the course of the year. We completed a series of strategic transactions that helped establish the Company as the preeminent platform for homeowners 55 and older seeking to benefit from their home equity. With most of these efforts now behind us, we are excited to move forward. As a business, we are firmly positioned as the leading provider of modern retirement solutions with the potential to reach tens of millions of customers nationwide.”
Fourth Quarter Financial Summary of Continuing Operations
|
($ 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. The decrease in cash was attributable to investments in our balance sheet related to non-agency production.
-
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 $541 million on a sequential-quarter basis primarily due to increases in HMBS obligations and nonrecourse debt, aligned to the change in securitized loans held for investment.
Segment Results
Retirement Solutions
The Retirement Solutions segment primarily generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.
|
|
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||||
|
($ 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, or down 7% from the prior quarter.
-
Fourth quarter revenue increased 3% from the third quarter to $41 million as seasonal volume declines were more than offset by increased margins in our Reverse business.
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of fair value gains or losses, gain on sale of loans, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
|
|
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||
|
($ 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 100% by existing non-controlling shareholders or outstanding Class A Common Stock.
(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 100% by existing non-controlling shareholders or outstanding Class A Common Stock.
(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 $59,130 and $59,130, respectively) |
|
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, $0.0001 par value; 6,000,000,000 shares authorized; 100,599,241 and 92,038,371 shares issued, respectively, and 96,340,741 and 87,779,871 shares outstanding, respectively |
|
10 |
|
|
|
9 |
|
|
Class B Common Stock, $0.0001 par value; 1,000,000 shares authorized; 15 and 15 shares issued and outstanding, respectively |
|
— |
|
|
|
— |
|
|
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 (United States) or 1-646-307-1963 (International). The replay pin number is 5706924. The replay can also be accessed on the “Investors” section of the Company’s website at https://www.financeofamerica.com/investors.
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 Plano, Texas. For more information, please visit www.financeofamerica.com.
Forward-Looking Statements
This release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only management’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that our actual results, financial condition and liquidity may differ, possibly materially, from the anticipated results, financial condition and liquidity in these forward-looking statements. The Company’s actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. The Company cautions readers not to place undue reliance upon any forward-looking statements, which are current only as of the date of this release. Results for any specified quarter are not necessarily indicative of the results that may be expected for the full year or any future period. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. All subsequent written and oral forward-looking statements concerning the Company or other matters and attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. A number of important factors exist that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: our ability to manage the unique challenges presented by operating as a modern retirement solutions platform rather than a vertically-integrated, diversified lending and complementary services platform due to the transformation of our business; our ability to successfully operate the recently integrated lending platform that we acquired from American Advisors Group in March 2023 and generally, our ability to operate our business profitably; our ability to respond to significant changes in prevailing interest rates and to resume profitable business operations; our geographic market concentration if the economic conditions in our current markets should decline or if our current markets are impacted by natural disasters; our use of estimates in measuring or determining the fair value of the majority of our financial assets and liabilities, which may require us to write down the value of these assets or write up the value of these liabilities if the estimates prove to be incorrect; our ability to prevent cyber intrusions and mitigate cyber risks; the possibility that the Company may be adversely affected by other economic, business and/or competitive factors in our business markets and worldwide financial markets, including a sustained period of higher interest rates; our ability to manage changes in our licensing status, business relationships or servicing guidelines with the Government National Mortgage Association, the United States Department of Housing and Urban Development or other governmental entities; our ability to obtain sufficient capital and liquidity to meet the financing and operational requirements of our business and our ability to comply with our debt agreements, including warehouse lending facilities, and pay down our substantial debt; our ability to refinance our debt on reasonable terms as it becomes due; our ability to manage disruptions in the secondary home loan market, including the mortgage-backed securities market; our ability to finance and recover costs of our reverse mortgage servicing operations; our ability to maintain compliance with the extensive regulations we are subject to, including consumer protection laws applicable to reverse mortgage lenders, which may be highly complex; our ability to compete with national banks, which are not subject to state licensing and operational requirements; our ability to manage various legal proceedings, federal or state governmental examinations and enforcement investigations we are subject to from time to time, the results of which are difficult to predict or estimate; our continued ability to remain in compliance with the terms of the consent orders issued by the Consumer Financial Protection Bureau, which we assumed in connection with our acquisition of operational assets from American Advisors Group; our holding company status and dependency on distributions from Finance of America Equity Capital LLC; our ability to comply with the continued listing standards of the New York Stock Exchange (“NYSE”) and avoid the delisting of our common stock from trading on its exchange; our common stock trading history has been characterized by low trading volume, which may result in an inability to sell your shares at a desired price, if at all; and our “controlled company” status under NYSE rules, which exempts us from certain corporate governance requirements and affords stockholders fewer protections.
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 U.S. Generally Accepted Accounting Principles (“GAAP”), including Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Earnings (Loss) per Share.
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 U.S. 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 alternative to net income (loss), operating cash flows, or any other performance measures determined in accordance with U.S. GAAP. Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Earnings (Loss) 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 (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 U.S. GAAP results and using our non-GAAP financial measures only as a supplement. Users of our consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures.
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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