Le Lézard
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Subjects: EARNINGS, Conference Call, Webcast, Advisory

Finance of America Reports Third Quarter 2022 Results


Finance of America Companies Inc., ("Finance of America" or the "Company") (NYSE: FOA), a customer focused, consumer and specialty lending business, reported financial results for the quarter ended September 30, 2022.

Third Quarter 2022 Financial Highlights

*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, President and Interim Chief Executive Officer commented, "To begin, I would like to thank all of our team members for their hard work this quarter, and in particular those members of our Mortgage Originations segment who will be leaving us as we exit this business. The exit from Mortgage will allow FOA to optimize our resources and prioritize high-growth businesses where we already hold distinct competitive advantages and leading positions in markets with positive macro tailwinds."

Third Quarter Financial Summary

($ amounts in millions, except margin and per share data)

 

 

 

Variance (%)

 

 

 

Variance (%)

 

 

 

 

 

Variance (%)

 

 

Q3'22

 

Q2'22

 

Q3'22 vs
Q2'22

 

Q3'21

 

Q3'22 vs
Q3'21

 

YTD 2022

 

YTD 2021

 

2022 vs
2021

 

 

Successor

 

Successor

 

 

 

Successor

 

 

 

Successor

 

Combined (1)

 

 

Funded volume

 

$

4,187

 

 

$

6,349

 

 

(34

) %

 

$

8,988

 

(53

) %

 

$

17,689

 

 

$

26,844

 

(34

) %

Total revenue

 

 

71

 

 

 

141

 

 

(50

) %

 

 

457

 

(84

) %

 

 

480

 

 

 

1,353

 

(65

) %

Total expenses and other, net

 

 

237

 

 

 

310

 

 

(24

) %

 

 

402

 

(41

) %

 

 

892

 

 

 

1,187

 

(25

) %

Pre-tax net income (loss)

 

 

(305

)

 

 

(169

)

 

(80

) %

 

 

55

 

(655

) %

 

 

(551

)

 

 

166

 

(432

) %

Net income (loss)

 

 

(302

)

 

 

(168

)

 

(80

) %

 

 

50

 

(704

) %

 

 

(534

)

 

 

160

 

(434

) %

Pre-tax income (loss) excluding impairment of intangibles and other assets(2)

 

 

(167

)

 

 

(169

)

 

1

%

 

 

55

 

(404

) %

 

 

(413

)

 

 

166

 

(349

) %

Adjusted net income (loss)(3)

 

 

(20

)

 

 

(22

)

 

9

%

 

 

75

 

(127

) %

 

 

(4

)

 

 

239

 

(102

) %

Adjusted EBITDA(3)

 

 

(17

)

 

 

(19

)

 

11

%

 

 

111

 

(115

) %

 

 

24

 

 

 

352

 

(93

) %

Basic earnings (loss) per share

 

$

(1.35

)

 

$

(0.65

)

 

(108

) %

 

$

0.36

 

(475

) %

 

$

(2.16

)

 

 

N/A

 

N/A

 

Diluted earnings (loss) per share(4)

 

$

(1.35

)

 

$

(0.70

)

 

(93

) %

 

$

0.22

 

(714

) %

 

$

(2.34

)

 

 

N/A

 

N/A

 

Adjusted diluted earnings (loss) per share(4)

 

$

(0.10

)

 

$

(0.12

)

 

17

%

 

$

0.39

 

(126

) %

 

$

(0.02

)

 

$

1.25

 

(102

) %

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

(2)

Calculated for each period as pre-tax income (loss) excluding impairment of intangibles and other assets.

(3)

See Reconciliation to GAAP section for a reconciliation of Adjusted net income (loss) and Adjusted EBITDA to Net income (loss).

(4)

Calculated on an if-converted basis. See Reconciliation to GAAP section for more detail.

Balance Sheet Highlights

($ amounts in millions)

 

September 30,

 

June 30,

 

Variance (%)

 

 

 

2022

 

 

2022

 

Q3 2022 vs. Q2 2022

Cash and cash equivalents

 

$

169

 

$

219

 

(23

) %

Securitized loans held for investment (HMBS & nonrecourse)

 

 

17,658

 

 

17,483

 

1

%

Mortgage servicing rights (MSRs)

 

 

103

 

 

359

 

(71

) %

Total assets

 

 

21,190

 

 

21,736

 

(3

) %

Total liabilities

 

 

20,615

 

 

20,873

 

(1

) %

Total equity

 

 

575

 

 

863

 

(33

) %

Total tangible equity(1)

 

 

137

 

 

288

 

(52

) %

(1)

Total tangible equity calculated as total equity less intangible assets, net.

Segment Results

Mortgage Originations

The Mortgage Originations segment generates revenue through fee income from loan originations and gain on sale of mortgage loans into the secondary market.

($ amounts in millions)

 

 

 

Variance (%)

 

 

 

Variance (%)

 

 

 

 

 

Variance (%)

 

 

Q3'22

 

Q2'22

 

Q3'22 vs
Q2'22

 

Q3'21

 

Q3'22 vs
Q3'21

 

YTD 2022

 

YTD 2021

 

2022 vs
2021

 

 

Successor

 

Successor

 

 

 

Successor

 

 

 

Successor

 

Combined (1)

 

 

Funded volume (Total)

 

$

2,697

 

 

$

4,229

 

 

(36

) %

 

$

7,383

 

 

(63

) %

 

$

12,032

 

 

$

22,716

 

 

(47

) %

Funded volume (Purchase)

 

 

2,278

 

 

 

3,336

 

 

(32

) %

 

 

3,759

 

 

(39

) %

 

 

8,380

 

 

 

9,918

 

 

(16

) %

Funded volume (non-agency)

 

 

504

 

 

 

945

 

 

(47

) %

 

 

994

 

 

(49

) %

 

 

2,568

 

 

 

2,826

 

 

(9

) %

Net rate lock volume

 

 

2,474

 

 

 

3,800

 

 

(35

) %

 

 

7,679

 

 

(68

) %

 

 

11,591

 

 

 

22,753

 

 

(49

) %

Mortgage originations margin

 

 

1.87

%

 

 

2.14

%

 

(13

) %

 

 

2.61

%

 

(28

) %

 

 

2.07

%

 

 

2.95

%

 

(30

) %

Total revenue

 

 

61

 

 

 

103

 

 

(41

) %

 

 

235

 

 

(74

) %

 

 

300

 

 

 

773

 

 

(61

) %

Impairment of intangibles and other assets

 

 

(129

)

 

 

?

 

 

N/A

 

 

 

?

 

 

N/A

 

 

 

(129

)

 

 

?

 

 

N/A

 

Pre-tax income (loss)

 

 

(170

)

 

 

(35

)

 

(386

) %

 

 

15

 

 

(1233

) %

 

 

(226

)

 

 

104

 

 

(317

) %

Pre-tax income (loss) excluding impairment of intangibles and other assets(2)

 

$

(41

)

 

$

(35

)

 

(17

) %

 

$

15

 

 

(373

) %

 

$

(97

)

 

$

104

 

 

(193

) %

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

(2)

Calculated for each period as pre-tax income (loss) excluding impairment of intangibles and other assets.

Reverse Originations

The Reverse Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.

($ amounts in millions)

 

 

 

Variance (%)

 

 

 

Variance (%)

 

 

 

 

 

Variance (%)

 

 

Q3'22

 

Q2'22

 

Q3'22 vs
Q2'22

 

Q3'21

 

Q3'22 vs
Q3'21

 

YTD 2022

 

YTD 2021

 

2022 vs
2021

 

 

Successor

 

Successor

 

 

 

Successor

 

 

 

Successor

 

Combined (1)

 

 

Funded volume

 

$

1,135

 

$

1,580

 

(28

) %

 

$

1,157

 

(2

) %

 

$

4,190

 

$

2,939

 

43

%

Total revenue

 

 

72

 

 

80

 

(10

) %

 

 

111

 

(35

) %

 

 

260

 

 

275

 

(5

) %

Pre-tax income

 

 

34

 

 

36

 

(6

) %

 

 

69

 

(51

) %

 

 

138

 

 

168

 

(18

) %

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

Commercial Originations

The Commercial Originations segment provides business purpose lending solutions for residential real estate investors. The Commercial Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of mortgage loans.

($ amounts in millions)

 

 

 

Variance (%)

 

 

 

Variance (%)

 

 

 

 

 

Variance (%)

 

 

Q3'22

 

Q2'22

 

Q3'22 vs
Q2'22

 

Q3'21

 

Q3'22 vs
Q3'21

 

YTD 2022

 

YTD 2021

 

2022 vs
2021

 

 

Successor

 

Successor

 

 

 

Successor

 

 

 

Successor

 

Combined (1)

 

 

Funded volume

 

$

355

 

 

$

540

 

 

(34

) %

 

$

448

 

(21

) %

 

$

1,468

 

 

$

1,189

 

23

%

Total revenue

 

 

12

 

 

 

13

 

 

(8

) %

 

 

28

 

(57

) %

 

 

46

 

 

 

65

 

(29

) %

Impairment of intangibles and other assets

 

 

(6

)

 

 

?

 

 

N/A

 

 

 

?

 

N/A

 

 

 

(6

)

 

 

?

 

N/A

 

Pre-tax income (loss)

 

 

(12

)

 

 

(12

)

 

?

%

 

 

6

 

(300

) %

 

 

(27

)

 

 

10

 

(370

) %

Pre-tax income (loss) excluding impairment of intangibles and other assets(2)

 

$

(6

)

 

$

(12

)

 

50

%

 

$

6

 

(200

) %

 

$

(21

)

 

$

10

 

(310

) %

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

(2)

Calculated for each period as pre-tax income (loss) excluding impairment of intangibles and other assets.

Lender Services

The Lender Services business generates revenue and earnings in the form of lender service support fees. Lender Services supports over 2,800 third party clients across the lending industry.

($ amounts in millions)

 

 

 

Variance (%)

 

 

 

Variance (%)

 

 

 

 

 

Variance (%)

 

 

Q3'22

 

Q2'22

 

Q3'22 vs
Q2'22

 

Q3'21

 

Q3'22 vs
Q3'21

 

YTD 2022

 

YTD 2021

 

2022 vs
2021

 

 

Successor

 

Successor

 

 

 

Successor

 

 

 

Successor

 

Combined (1)

 

 

Total revenue

 

$

44

 

 

$

58

 

 

(24

) %

 

$

88

 

 

(50

) %

 

$

178

 

 

$

245

 

 

(27

) %

% of revenue from third-party clients

 

 

80

%

 

 

81

%

 

(1

) %

 

 

81

%

 

(1

) %

 

 

81

%

 

 

79

%

 

3

%

Pre-tax income (loss)

 

$

(11

)

 

$

(5

)

 

(120

) %

 

$

9

 

 

(222

) %

 

$

(9

)

 

$

30

 

 

(130

) %

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

Portfolio Management

The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains or losses, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.

($ amounts in millions)

 

 

 

Variance (%)

 

 

 

Variance (%)

 

 

 

 

 

Variance (%)

 

 

Q3'22

 

Q2'22

 

Q3'22 vs
Q2'22

 

Q3'21

 

Q3'22 vs
Q3'21

 

YTD 2022

 

YTD 2021

 

2022 vs
2021

 

 

Successor

 

Successor

 

 

 

Successor

 

 

 

Successor

 

Combined (1)

 

 

Assets under management

 

$

19,871

 

 

$

19,881

 

 

?

%

 

$

18,403

 

 

8

%

 

$

19,871

 

 

$

18,403

 

 

8

%

Assets excluding HMBS and non-recourse obligations

 

 

2,560

 

 

 

2,687

 

 

(5

) %

 

 

2,452

 

 

4

%

 

 

2,560

 

 

 

2,452

 

 

4

%

Mortgage servicing rights (MSRs)

 

 

103

 

 

 

359

 

 

(71

) %

 

 

341

 

 

(70

) %

 

 

103

 

 

 

341

 

 

(70

) %

Total revenue

 

 

(104

)

 

 

(95

)

 

(9

) %

 

 

10

 

 

(1140

) %

 

 

(250

)

 

 

46

 

 

(643

) %

Impairment of intangibles and other assets

 

 

(4

)

 

 

?

 

 

N/A

 

 

 

?

 

 

N/A

 

 

 

(4

)

 

 

?

 

 

N/A

 

Pre-tax loss

 

 

(135

)

 

 

(129

)

 

(5

) %

 

 

(20

)

 

(575

) %

 

 

(350

)

 

 

(41

)

 

(754

) %

Pre-tax loss excluding impairment of intangibles and other assets(2)

 

$

(131

)

 

$

(129

)

 

(2

) %

 

$

(20

)

 

(555

) %

 

$

(346

)

 

$

(41

)

 

(744

) %

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

(2)

Calculated for each period as Pre-tax income (loss) excluding impairment of intangibles and other assets.

Reconciliation to GAAP

($ amounts in millions)

Q3'22

 

Q2'22

 

Q3'21

 

YTD 2022

 

YTD 2021

 

Successor

 

Combined (1)

Reconciliation of net income (loss) to adjusted net income (loss) and adjusted EBITDA

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(302

)

 

$

(168

)

 

$

50

 

 

$

(534

)

 

$

160

 

Add back: Benefit (provision) for income taxes

 

3

 

 

 

1

 

 

 

(4

)

 

 

17

 

 

 

(7

)

Net income (loss) before taxes

 

(305

)

 

 

(169

)

 

 

54

 

 

 

(551

)

 

 

167

 

Adjustments for:

 

 

 

 

 

 

 

 

 

Changes in fair value(2)

 

116

 

 

 

111

 

 

 

20

 

 

 

323

 

 

 

55

 

Amortization and impairment of intangibles and other assets(3)

 

152

 

 

 

14

 

 

 

13

 

 

 

180

 

 

 

28

 

Share-based compensation(4)

 

7

 

 

 

7

 

 

 

11

 

 

 

23

 

 

 

21

 

Certain non-recurring costs(5)

 

3

 

 

 

9

 

 

 

3

 

 

 

21

 

 

 

53

 

Adjusted net income (loss) before taxes

 

(27

)

 

 

(28

)

 

 

101

 

 

 

(4

)

 

 

324

 

(Provision) benefit for income taxes(6)

 

7

 

 

 

6

 

 

 

(26

)

 

 

?

 

 

 

(85

)

Adjusted net income (loss)

 

(20

)

 

 

(22

)

 

 

75

 

 

 

(4

)

 

 

239

 

Provision (benefit) for income taxes(6)

 

(7

)

 

 

(6

)

 

 

26

 

 

 

?

 

 

 

85

 

Depreciation

 

3

 

 

 

2

 

 

 

3

 

 

 

8

 

 

 

7

 

Interest expense on non-funding debt

 

7

 

 

 

7

 

 

 

7

 

 

 

20

 

 

 

21

 

Adjusted EBITDA

$

(17

)

 

$

(19

)

 

$

111

 

 

$

24

 

 

$

352

 

OTHER KEY METRICS

 

 

 

 

 

 

 

 

 

Cash paid for income taxes

$

?

 

 

$

?

 

 

$

2

 

 

$

?

 

 

$

2

 

 

 

 

 

 

 

 

 

 

 

($ amounts in millions except shares and $ per share)

Q3'22

 

Q2'22

 

Q3'21

 

YTD 2022

 

YTD 2021

 

Successor

 

Combined (1)

GAAP PER SHARE MEASURES

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to controlling interest

$

(85

)

 

$

(41

)

 

$

21

 

 

$

(134

)

 

 

N/A

 

Weighted average outstanding share count

 

62,804,809

 

 

 

62,379,041

 

 

 

59,861,171

 

 

 

61,993,353

 

 

 

N/A

 

Basic earnings (loss) per share

$

(1.35

)

 

$

(0.65

)

 

$

0.36

 

 

$

(2.16

)

 

 

N/A

 

If-converted method net earnings (loss)

 

(85

)

 

 

(131

)

 

 

43

 

 

 

(441

)

 

 

N/A

 

Weighted average diluted share count

 

62,804,809

 

 

 

187,818,255

 

 

 

191,161,431

 

 

 

188,375,945

 

 

 

N/A

 

Diluted earnings (loss) per share

$

(1.35

)

 

$

(0.70

)

 

$

0.22

 

 

$

(2.34

)

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP PER SHARE MEASURES

 

 

 

 

 

 

 

 

 

Adjusted net income (loss)

$

(20

)

 

$

(22

)

 

$

75

 

 

$

(4

)

 

$

239

 

Weighted average diluted share count

 

187,877,936

 

 

 

187,818,225

 

 

 

191,161,431

 

 

 

188,375,945

 

 

 

191,180,610

 

Adjusted diluted earnings (loss) per share

$

(0.10

)

 

$

(0.12

)

 

$

0.39

 

 

$

(0.02

)

 

$

1.25

 

($ amounts in millions)

SF&S

 

Mortgage

 

 

Total

Reconciliation of net loss before taxes to adjusted net income (loss) for the three months ended September 30, 2022

 

 

 

 

 

 

Net loss before taxes

$

(135

)

 

$

(170

)

 

 

$

(305

)

Adjustments for:

 

 

 

 

 

 

Changes in fair value(2)

 

116

 

 

 

?

 

 

 

 

116

 

Amortization and impairment of intangibles and other assets(3)

 

21

 

 

 

131

 

 

 

 

152

 

Share-based compensation(4)

 

6

 

 

 

1

 

 

 

 

7

 

Certain non-recurring costs(5)

 

2

 

 

 

1

 

 

 

 

3

 

Adjusted net income (loss) before taxes

 

10

 

 

 

(37

)

 

 

 

(27

)

(Provision) benefit for income taxes(6)

 

(3

)

 

 

10

 

 

 

 

7

 

Adjusted net income (loss)

$

7

 

 

$

(27

)

 

 

$

(20

)

 

 

 

 

 

 

 

($ amounts in millions, except shares and $ per share)

 

 

 

 

 

 

NON-GAAP PER SHARE MEASURES

 

 

 

 

 

 

Adjusted net income (loss)

$

7

 

 

$

(27

)

 

 

$

(20

)

Weighted average diluted share count

 

187,877,936

 

 

 

187,877,936

 

 

 

 

187,877,936

 

Adjusted diluted earnings (loss) per share

$

0.04

 

 

$

(0.14

)

 

 

$

(0.10

)

($ amounts in millions)

SF&S

 

Mortgage

 

 

Total

Reconciliation of net loss before taxes to adjusted net income (loss) for the nine months ended September 30, 2022

 

 

 

 

 

 

Net loss before taxes

$

(324

)

 

$

(227

)

 

 

$

(551

)

Adjustments for:

 

 

 

 

 

 

Changes in fair value(2)

 

323

 

 

 

?

 

 

 

 

323

 

Amortization and impairment of intangibles and other assets(3)

 

45

 

 

 

135

 

 

 

 

180

 

Share-based compensation(4)

 

17

 

 

 

6

 

 

 

 

23

 

Certain non-recurring costs(5)

 

12

 

 

 

9

 

 

 

 

21

 

Adjusted net income (loss) before taxes

 

73

 

 

 

(77

)

 

 

 

(4

)

Provision (benefit) for income taxes(6)

 

(20

)

 

 

20

 

 

 

 

?

 

Adjusted net income (loss)

$

53

 

 

$

(57

)

 

 

$

(4

)

 

 

 

 

 

 

 

($ amounts in millions, except shares and $ per share)

 

 

 

 

 

 

NON-GAAP PER SHARE MEASURES

 

 

 

 

 

 

Adjusted net income (loss)

$

53

 

 

$

(57

)

 

 

$

(4

)

Weighted average diluted share count

 

188,375,945

 

 

 

188,375,945

 

 

 

 

188,375,945

 

Adjusted diluted earnings (loss) per share

$

0.28

 

 

$

(0.30

)

 

 

$

(0.02

)

(1)

Financial results of combined successor and predecessor of the business combination with Replay.

(2)

Changes in fair value include changes in fair value of loans and securities held for investment, deferred purchase price obligations, warrant liability, and minority investments.

(3)

Successor period amortization includes amortization of intangibles recognized from the business combination with Replay and an impairment charge on intangibles and other certain long lived assets recognized in the third quarter of 2022.

(4)

Funded 85% by the non-controlling shareholders.

(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

Consolidated Statements of Financial Condition

(In thousands, except share data)

(Unaudited)

 

 

September 30, 2022

 

June 30, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

169,072

 

 

$

219,033

 

Restricted cash

 

210,147

 

 

 

354,803

 

Loans held for investment, subject to HMBS related obligations, at fair value

 

10,916,551

 

 

 

10,882,441

 

Loans held for investment, subject to nonrecourse debt, at fair value

 

6,741,391

 

 

 

6,600,762

 

Loans held for investment, at fair value

 

1,307,413

 

 

 

1,058,410

 

Loans held for sale, at fair value

 

859,650

 

 

 

1,229,594

 

Mortgage servicing rights ("MSRs"), at fair value, $59,800 and $142,435 subject to nonrecourse MSRs financing liability, respectively

 

103,069

 

 

 

359,006

 

Derivative assets

 

89,899

 

 

 

55,186

 

Fixed assets and leasehold improvements, net

 

19,828

 

 

 

29,805

 

Intangible assets, net

 

438,300

 

 

 

575,284

 

Other assets, net

 

334,577

 

 

 

371,902

 

TOTAL ASSETS

$

21,189,897

 

 

$

21,736,226

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

HMBS related obligations, at fair value

$

10,784,841

 

 

$

10,745,879

 

Nonrecourse debt, at fair value

 

6,745,526

 

 

 

6,752,084

 

Other financing lines of credit

 

2,305,999

 

 

 

2,593,290

 

Payables and other liabilities

 

395,635

 

 

 

428,768

 

Notes payable, net

 

382,810

 

 

 

353,005

 

TOTAL LIABILITIES

 

20,614,811

 

 

 

20,873,026

 

 

 

 

 

EQUITY

 

 

 

Class A Common Stock, $0.0001 par value; 6,000,000,000 shares authorized; 62,959,276 shares issued and outstanding at September 30, 2022

 

6

 

 

 

6

 

Class B Common Stock, $0.0001 par value; 1,000,000 shares authorized, 15 shares issued and outstanding at September 30, 2022

 

?

 

 

 

?

 

Additional paid-in capital

 

876,140

 

 

 

860,232

 

Accumulated deficit

 

(577,272

)

 

 

(492,786

)

Accumulated other comprehensive loss

 

(367

)

 

 

(262

)

Noncontrolling interest

 

276,579

 

 

 

496,010

 

TOTAL EQUITY

 

575,086

 

 

 

863,200

 

TOTAL LIABILITIES AND EQUITY

$

21,189,897

 

 

$

21,736,226

 

 

Finance of America Companies Inc. and Subsidiaries

Selected Financial Information

Consolidated Statements of Operations

(In thousands, except share data)

(Unaudited)

 

 

Q3'22

 

Q2'22

 

Q3'21

 

YTD 2022

 

 

YTD 2021

 

Successor

 

 

Combined(1)

REVENUES

 

 

 

 

 

 

 

 

 

 

Gain on sale and other income from loans held for sale, net

$

36,179

 

 

$

71,805

 

 

$

210,095

 

 

$

226,336

 

 

 

$

689,006

 

Net fair value gains (losses) on mortgage loans and related obligations

 

(6,376

)

 

 

1,613

 

 

 

122,509

 

 

 

5,672

 

 

 

 

330,323

 

Fee income

 

70,512

 

 

 

88,681

 

 

 

145,725

 

 

 

316,798

 

 

 

 

397,960

 

Net interest expense:

 

 

 

 

 

 

 

 

 

 

?

 

Interest income

 

12,022

 

 

 

15,853

 

 

 

15,862

 

 

 

41,748

 

 

 

 

41,674

 

Interest expense

 

(41,236

)

 

 

(36,834

)

 

 

(37,691

)

 

 

(110,900

)

 

 

 

(105,683

)

Net interest expense

 

(29,214

)

 

 

(20,981

)

 

 

(21,829

)

 

 

(69,152

)

 

 

 

(64,009

)

TOTAL REVENUES

 

71,101

 

 

 

141,118

 

 

 

456,500

 

 

 

479,654

 

 

 

 

1,353,280

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

Salaries, benefits, and related expenses

 

146,385

 

 

 

194,294

 

 

 

262,000

 

 

 

549,755

 

 

 

 

775,261

 

Occupancy, equipment rentals, and other office related expenses

 

7,003

 

 

 

7,262

 

 

 

8,283

 

 

 

22,103

 

 

 

 

22,600

 

General and administrative expenses

 

105,533

 

 

 

123,457

 

 

 

141,595

 

 

 

361,613

 

 

 

 

388,083

 

TOTAL EXPENSES

 

258,921

 

 

 

325,013

 

 

 

411,878

 

 

 

933,471

 

 

 

 

1,185,944

 

IMPAIRMENT OF INTANGIBLES AND OTHER ASSETS

 

(138,184

)

 

 

?

 

 

 

?

 

 

 

(138,184

)

 

 

 

?

 

OTHER, NET

 

21,330

 

 

 

15,132

 

 

 

9,928

 

 

 

41,234

 

 

 

 

(1,067

)

NET INCOME (LOSS) BEFORE INCOME TAXES

 

(304,674

)

 

 

(168,763

)

 

 

54,550

 

 

 

(550,767

)

 

 

 

166,269

 

Provision (benefit) for income taxes

 

(2,974

)

 

 

(940

)

 

 

4,440

 

 

 

(17,249

)

 

 

 

6,663

 

NET INCOME (LOSS)

 

(301,700

)

 

 

(167,823

)

 

 

50,110

 

 

 

(533,518

)

 

 

 

159,606

 

CRNCI

 

?

 

 

 

?

 

 

 

?

 

 

 

?

 

 

 

 

4,260

 

Noncontrolling interest

 

(217,214

)

 

 

(127,143

)

 

 

28,726

 

 

 

(399,859

)

 

 

 

11,838

 

NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST

$

(84,486

)

 

$

(40,680

)

 

$

21,384

 

 

$

(133,659

)

 

 

$

143,508

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS (LOSS) PER SHARE

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

62,804,809

 

 

 

62,379,041

 

 

 

59,861,171

 

 

 

61,993,353

 

 

 

 

N/A

 

Basic net earnings (loss) per share

$

(1.35

)

 

$

(0.65

)

 

$

0.36

 

 

$

(2.16

)

 

 

 

N/A

 

Diluted weighted average shares outstanding

 

62,804,809

 

 

 

187,818,225

 

 

 

191,161,431

 

 

 

188,375,945

 

 

 

 

N/A

 

Diluted earnings (loss) per share

$

(1.35

)

 

$

(0.70

)

 

$

0.22

 

 

$

(2.34

)

 

 

 

N/A

 

Webcast and Conference Call

Management will host a webcast and conference call on Wednesday, November 9, 2022 at 8:00 am Eastern Time to discuss the Company's results for the third quarter ended September 30, 2022. A copy of the press release and investor presentation 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. 1-833-927-1758 (Domestic)
  2. 1-929-526-1599 (International)
  3. Conference ID: 696932

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 November 23, 2022. To access the replay, dial 1-866-813-9403 (United States) or +44 204 525 0658 (International). The replay pin number is 780370. 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 specialty finance consumer lending platform that provides pathways to achieve greater financial freedom through home equity. Through FOA's subsidiaries, customers have access to a diverse range of flexible, end-to-end home financing and home equity solutions including home improvement loans and reverse mortgages as well as loans to residential real estate investors distributed across retail, third-party network, and digital channels. In addition, FOA's companies offer complementary lending services to enhance the customer experience, as well as capital markets and portfolio management capabilities to optimize distribution to investors. FOA is headquartered in Plano, TX. 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 maybe 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: 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; our ability to obtain sufficient capital and liquidity to meet the financing and operational requirements of our business; our ability to comply with our debt agreements and pay down our substantial debt; our Resource Optimization Plan and its expected benefits, anticipated cost savings, financial and accounting impact, and timing; 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 servicing operations; our ability to manage changes in our licensing status, business relationships, or servicing guidelines with Fannie Mae, Freddie Mac and Ginnie Mae or other governmental entities; economic, finance and public health disruptions caused by the COVID-19 pandemic and its unique challenges to our business, which could adversely impact our ability to originate and service mortgages, manage our portfolio of assets and provide lender services, and could also adversely impact our counterparties, liquidity and employees; our ability to respond to significant changes in prevailing interest rates; our geographic market concentration if the economic conditions in our current markets should decline or as a result of natural disasters; our use of estimates in measuring or determining the fair value of the majority of our assets and liabilities, which may require us to write down the value of these assets or write up the value of these liabilities if they prove to be incorrect; the engagement of our Lender Services business by our loan originator businesses may give appearance of a conflict of interest; third party customers of our Lender Services businesses and concerns regarding conflicts of interest within our Lender Services Businesses, due to their affiliation with the Company; our Lender Services business has operations in the Philippines that could be adversely affected by changes in political or economic stability or by government policies; our ability to operate in heavily regulated industries, including our mortgage loan origination and servicing activities (including lender services), which expose us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the U.S. federal, state and local levels; our ability to manage various legal proceedings, federal or state governmental examinations and enforcement investigations we are subject to from time to time, which may be highly complex and slow to develop, and results are difficult to predict or estimate; our ability to prevent cyber intrusions and mitigate cyber risks; our ability to compete with national banks, which are not subject to state licensing and operational requirements; our holding company status and dependency on distributions from Finance of America Equity Capital LLC; and our "controlled company" status under New York Stock Exchange rules, which exempts us from certain corporate governance requirements and affords stockholders fewer protections; our substantial number of shares of Class A common stock issuable upon conversion of Finance of America Equity Capital LLC Units, which may dilute your investment, and the sale of which could cause significant downward pricing pressure on our stock; our brief 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.

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, 2021, originally filed with the Securities and Exchange Commission (the "SEC") on March 15, 2022, 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 certain non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Adjusted Diluted Earnings per Share.

We define Adjusted Net Income as net income adjusted for change in fair value of loans and securities held for investment due to assumption changes, change in fair value of deferred purchase price obligations (including earnouts and TRA obligations), warrant liability, and minority investments, amortization and other impairments, equity based compensation, and certain non-recurring costs.

We define Adjusted EBITDA as Adjusted Net Income (defined above) adjusted for taxes, interest on non-funding debt and depreciation.

We define Adjusted Diluted Earnings Per Share as Adjusted Net Income (defined above) divided by our weighted average diluted share count, which includes our issued and outstanding Class A Common Stock shares plus Finance of America Equity Capital LLC's 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. Generally Accepted Accounting Principles ("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 determine in accordance with GAAP. Adjusted Net Income, Adjusted EBITDA, and Adjusted Diluted Earnings per Share have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations of these metrics are: (i) cash expenditures for future contractual commitments; (ii) cash requirements for working capital needs; (iii) cash requirements for certain tax payments; and (iv) all non-cash income/expense items.

Because of these limitations, Adjusted Net Income, Adjusted EBITDA, and Adjusted Diluted Earnings per Share should not be considered as measures of discretionary cash available to us to invest in the growth of our business or distribute to stockholders. We compensate for these limitations by relying primarily on our GAAP results and using our non-GAAP financial measures only as a supplement. Users of our interim unaudited consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures.


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