– $8.48 in basic earnings per share or $204
million of net income from continuing operations for the quarter
–
– $0.67 in adjusted earnings per share or $15
million of adjusted net income for the quarter –
– Adjusted EBITDA for the quarter of $32
million –
Finance of America Companies Inc. (“Finance of America” or
the “Company”) (NYSE: FOA), a leading provider of home
equity-based financing solutions for a modern retirement, reported
financial results for the quarter ended September 30, 2024.
Third Quarter 2024 Highlights(1)
- Net income from continuing operations of $204 million or $8.48
basic earnings per share for the quarter.
- Adjusted net income(2) of $15 million or $0.67 adjusted
earnings per share for the quarter.
- The third quarter 2024 marks the fifth consecutive quarter of
improved operating performance on an adjusted net basis.
- Adjusted EBITDA(2) of $32 million for the quarter.
- Book equity increased to $456 million as of September 30, 2024,
or nearly $20 per fully diluted share.
- The Company completed its reverse stock split on July 25, 2024,
bringing it back into compliance with NYSE continued listing
standards.
- The Company successfully closed its exchange offer on October
31, 2024 with participation from holders of nearly 98% of senior
unsecured notes.
(1) The financial information
presented in the highlights is for the Company’s continuing
operations
(2) See the sections titled
“Reconciliation to GAAP” and “Non-GAAP Financial Measures” for
reconciliations to the most directly comparable GAAP measures and
other important disclosures.
Graham A. Fleming, Chief Executive Officer commented, “We’re
very pleased with this quarter’s results, which exceeded our volume
guidance and delivered strong GAAP earnings performance along with
a return to profitability in adjusted net income. We continue to
focus on our strategic initiatives, and now with a stronger balance
sheet, are well-positioned for continued growth.”
Third Quarter Financial Summary of Continuing
Operations
($ amounts in millions, except per share
data)
Variance (%)
Variance (%)
Variance (%)
Q3'24
Q2'24
Q3'24 vs Q2'24
Q3'23
Q3'24 vs Q3'23
YTD 2024
YTD 2023
2024 vs 2023
Funded volume
$
513
$
447
15
%
$
512
—
%
$
1,384
$
1,315
5
%
Total revenues
290
79
267
%
(70
)
514
%
444
(41
)
1183
%
Total expenses and other, net
82
83
(1
)%
102
(20
)%
255
296
(14
)%
Pre-tax income (loss) from continuing
operations
208
(4
)
5300
%
(173
)
220
%
189
(338
)
156
%
Net income (loss) from continuing
operations
204
(5
)
4180
%
(172
)
219
%
183
(338
)
154
%
Adjusted net income (loss)(1)
15
—
N/A
(24
)
163
%
9
(64
)
114
%
Adjusted EBITDA(1)
32
10
220
%
(23
)
239
%
42
(59
)
171
%
Basic earnings (loss) per share
$
8.48
$
(0.20
)
4340
%
$
(7.36
)
215
%
$
7.80
$
(15.72
)
150
%
Diluted earnings (loss) per share(2)
$
7.50
$
(0.29
)
2686
%
$
(7.36
)
202
%
$
6.65
$
(15.72
)
142
%
Adjusted earnings (loss) per share(1)
$
0.67
$
—
N/A
$
(1.03
)
165
%
$
0.38
$
(2.95
)
113
%
(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)
September 30,
June 30,
Variance (%)
2024
2024
Q3'24 vs Q2'24
Cash and cash equivalents
$
44
$
47
(6
)%
Securitized loans held for investment
(HMBS & nonrecourse)
27,619
26,614
4
%
Total assets
28,950
27,974
3
%
Total liabilities
28,494
27,723
3
%
Total equity
456
251
82
%
- Total equity increased from $251 million to $456 million,
reflecting enhanced operational performance and positive fair value
adjustments on the Company’s retained interests in securitizations
resulting from improving market inputs and model assumptions.
- Additionally, tangible net worth increased from $16 million as
of June 30, 2024 to $231 million as of September 30, 2024.
Segment Results
Retirement Solutions
The Retirement Solutions segment primarily generates revenue and
earnings in the form of net origination gains and origination fees
earned on the origination of reverse mortgage loans.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q3'24
Q2'24
Q3'24 vs Q2'24
Q3'23
Q3'24 vs Q3'23
YTD 2024
YTD 2023
2024 vs 2023
Funded volume
$
513
$
447
15
%
$
512
—
%
$
1,384
$
1,315
5
%
Total revenue
64
47
36
%
40
60
%
157
107
47
%
Pre-tax income (loss)
16
(2
)
900
%
(20
)
180
%
10
(47
)
121
%
Adjusted net income (loss)(1)
19
7
171
%
(6
)
417
%
30
(10
)
400
%
(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 $16
million and adjusted net income of $19 million as a result of
increased volumes and improved margins.
- Compared to the third quarter 2023, total revenue increased by
60% primarily due to an increase in revenue margin and funded
volume, which led to a 180% improvement in pre-tax income and a
417% improvement in adjusted net income.
- Total expenses decreased significantly from the third quarter
2023 from $60 million to $49 million as the business completed the
integration of the retail platform and streamlined business
operations.
Portfolio Management
The Portfolio Management segment primarily generates revenue and
earnings in the form of net interest income and fair value changes
on our portfolio assets, monetized through securitization, sale, or
other financing of those assets.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q3'24
Q2'24
Q3'24 vs Q2'24
Q3'23
Q3'24 vs Q3'23
YTD 2024
YTD 2023
2024 vs 2023
Assets under management
$
28,659
$
27,655
4
%
$
26,023
10
%
$
28,659
$
26,023
10
%
Assets excluding HMBS and nonrecourse
obligations
1,830
1,624
13
%
1,232
49
%
1,830
1,232
49
%
Total revenue
235
41
473
%
(103
)
328
%
313
(125
)
350
%
Pre-tax income (loss)
217
22
886
%
(124
)
275
%
253
(193
)
231
%
Adjusted net income(1)
12
12
—
%
1
1100
%
30
7
329
%
(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 $217
million, an improvement against the prior quarter and third quarter
2023 primarily due to positive fair value adjustments of retained
interests in securitizations, resulting from market inputs and
model assumptions.
- Adjusted net income during the third quarter totaled $12
million, flat to the prior quarter and an increase of $11 million
year over year, primarily driven by an increase in accreted yield
on the Company’s residual interests.
Finance of America Companies
Inc.
Selected Financial
Information
Condensed Consolidated
Statements of Financial Condition
(in thousands, except share
data)
(unaudited)
September 30, 2024
June 30, 2024
ASSETS
Cash and cash equivalents
$
44,258
$
46,509
Restricted cash
176,105
200,104
Loans held for investment, subject to HMBS
related obligations, at fair value
18,521,337
18,196,092
Loans held for investment, subject to
nonrecourse debt, at fair value
9,097,369
8,418,195
Loans held for investment, at fair
value
703,356
677,726
Intangible assets, net
225,639
234,936
Other assets, net
178,493
196,134
Assets of discontinued operations
3,827
4,658
TOTAL ASSETS
$
28,950,384
$
27,974,354
LIABILITIES AND EQUITY
HMBS related obligations, at fair
value
$
18,292,043
$
17,980,232
Nonrecourse debt, at fair value
8,537,119
8,050,708
Other financing lines of credit
1,054,568
1,073,844
Notes payable, net (includes amounts due
to related parties of $84,630 and $84,630, respectively)
435,744
442,971
Payables and other liabilities
160,869
157,273
Liabilities of discontinued operations
13,585
18,029
TOTAL LIABILITIES
28,493,928
27,723,057
EQUITY
Class A Common Stock, $0.0001 par value;
6,000,000,000 shares authorized; 10,351,652 and 10,344,043 shares
issued, respectively, and 9,925,802 and 9,918,193 shares
outstanding, respectively
1
1
Class B Common Stock, $0.0001 par value;
1,000,000 shares authorized; 15 shares issued and outstanding,
respectively
—
—
Additional paid-in capital
953,023
951,535
Accumulated deficit
(639,807
)
(724,010
)
Accumulated other comprehensive loss
(273
)
(296
)
Noncontrolling interest
143,512
24,067
TOTAL EQUITY
456,456
251,297
TOTAL LIABILITIES AND EQUITY
$
28,950,384
$
27,974,354
Finance of America Companies
Inc.
Selected Financial
Information
Condensed Consolidated
Statements of Operations
(in thousands, except share
data)
(unaudited)
Q3'24
Q2'24
Q3'23
YTD 2024
YTD 2023
PORTFOLIO INTEREST INCOME
Interest income
$
489,900
$
478,091
$
443,999
$
1,431,970
$
1,169,624
Interest expense
(426,839
)
(412,618
)
(372,459
)
(1,233,261
)
(970,428
)
NET PORTFOLIO INTEREST INCOME
63,061
65,473
71,540
198,709
199,196
OTHER INCOME (EXPENSE)
Net origination gains
57,216
40,260
31,376
137,133
88,777
Gain on securitization of HECM tails,
net
10,560
11,031
7,100
32,317
17,095
Fair value changes from model
amortization
(43,753
)
(47,813
)
(56,882
)
(149,174
)
(162,386
)
Fair value changes from market inputs or
model assumptions
204,154
11,260
(122,449
)
228,976
(172,168
)
Net fair value changes on loans and
related obligations
228,177
14,738
(140,855
)
249,252
(228,682
)
Fee income
8,054
7,880
13,201
22,170
33,377
Gain (loss) on sale and other income from
loans held for sale, net
—
216
(6,984
)
302
(23,464
)
Non-funding interest expense, net
(9,219
)
(9,268
)
(7,342
)
(26,639
)
(21,909
)
NET OTHER INCOME (EXPENSE)
227,012
13,566
(141,980
)
245,085
(240,678
)
TOTAL REVENUES
290,073
79,039
(70,440
)
443,794
(41,482
)
EXPENSES
Salaries, benefits, and related
expenses
31,083
35,053
48,557
105,159
140,469
Loan production and portfolio related
expenses
6,946
5,662
6,370
21,221
21,296
Loan servicing expenses
7,772
7,632
8,000
23,622
23,274
Marketing and advertising expenses
10,325
10,706
11,491
29,543
22,166
Depreciation and amortization
9,777
9,753
9,954
29,208
32,431
General and administrative expenses
14,405
16,241
21,054
47,917
59,572
TOTAL EXPENSES
80,308
85,047
105,426
256,670
299,208
IMPAIRMENT OF OTHER ASSETS
—
—
(558
)
(600
)
(558
)
OTHER, NET
(1,592
)
2,240
3,853
2,101
2,852
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
208,173
(3,768
)
(172,571
)
188,625
(338,396
)
Provision (benefit) for income taxes from
continuing operations
4,425
1,153
(103
)
5,578
(786
)
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
203,748
(4,921
)
(172,468
)
183,047
(337,610
)
NET LOSS FROM DISCONTINUED
OPERATIONS
—
(203
)
(2,464
)
(4,727
)
(45,211
)
NET INCOME (LOSS)
203,748
(5,124
)
(174,932
)
178,320
(382,821
)
Noncontrolling interest
119,545
(3,035
)
(109,569
)
103,744
(241,372
)
NET INCOME (LOSS) ATTRIBUTABLE TO
CONTROLLING INTEREST
$
84,203
$
(2,089
)
$
(65,363
)
$
74,576
$
(141,449
)
EARNINGS (LOSS) PER SHARE
Basic weighted average shares
outstanding
9,924,671
9,898,182
8,772,623
9,824,171
7,980,449
Basic earnings (loss) per share from
continuing operations
$
8.48
$
(0.20
)
$
(7.36
)
$
7.80
$
(15.72
)
Basic earnings (loss) per share
$
8.48
$
(0.21
)
$
(7.45
)
$
7.59
$
(17.72
)
Diluted weighted average shares
outstanding
23,159,304
23,084,189
8,772,623
23,062,616
7,980,449
Diluted earnings (loss) per share from
continuing operations
$
7.50
$
(0.29
)
$
(7.36
)
$
6.65
$
(15.72
)
Diluted earnings (loss) per share
$
7.50
$
(0.30
)
$
(7.45
)
$
6.47
$
(17.72
)
(unaudited)
Reconciliation to GAAP
($ amounts in millions)(1)
Q3'24
Q2'24
Q3'23
YTD 2024
YTD 2023
Reconciliation of net income (loss)
from continuing operations to adjusted net income (loss) and
adjusted EBITDA
Net income (loss) from continuing
operations
$
204
$
(5
)
$
(172
)
$
183
$
(338
)
Add back: (Provision) benefit for income
taxes
(4
)
(1
)
1
(6
)
1
Net income (loss) from continuing
operations before taxes
208
(4
)
(173
)
189
(338
)
Adjustments for:
Changes in fair value(2)
(198
)
(8
)
120
(216
)
197
Amortization or impairment of intangibles
and impairment of other assets(3)
9
9
9
28
28
Equity-based compensation(4)
2
1
5
7
14
Certain non-recurring costs(5)
—
2
6
4
12
Adjusted net income (loss) before
taxes
21
—
(32
)
12
(86
)
Benefit (provision) for income
taxes(6)
(6
)
—
8
(4
)
23
Adjusted net income (loss)
15
—
(24
)
9
(64
)
Provision (benefit) for income
taxes(6)
6
—
(8
)
4
(23
)
Depreciation
—
—
1
1
5
Interest expense on non-funding debt
10
10
8
28
23
Adjusted EBITDA
$
32
$
10
$
(23
)
$
42
$
(59
)
($ amounts in millions except shares and $
per share)
Q3'24
Q2'24
Q3'23
YTD 2024
YTD 2023
GAAP PER SHARE MEASURES
Net income (loss) from continuing
operations attributable to controlling interest
$
84
$
(2
)
$
(65
)
$
77
$
(125
)
Weighted average outstanding share
count
9,924,671
9,898,182
8,772,623
9,824,171
7,980,449
Basic earnings (loss) per share from
continuing operations
$
8.48
$
(0.20
)
$
(7.36
)
$
7.80
$
(15.72
)
If-converted method net income (loss) from
continuing operations
$
174
$
(7
)
$
(65
)
$
153
$
(125
)
Weighted average diluted share count
23,159,304
23,084,189
8,772,623
23,062,616
7,980,449
Diluted earnings (loss) per share from
continuing operations(7)
$
7.50
$
(0.29
)
$
(7.36
)
$
6.65
$
(15.72
)
NON-GAAP PER SHARE MEASURES
Adjusted net income (loss)
$
15
$
—
$
(24
)
$
9
$
(64
)
Weighted average share count
23,159,304
23,084,189
22,916,628
23,062,616
21,559,717
Adjusted earnings (loss) per
share
$
0.67
$
—
$
(1.03
)
$
0.38
$
(2.95
)
(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.
(4)
Beginning with the third quarter
of 2024, the Company revised our definitions of adjusted net income
(loss), adjusted EBITDA, and adjusted earnings (loss) per share to
now adjust for all non-cash equity-based compensation in this line
item, excluding forfeitures and accelerations associated with
restructuring activities, which are included in certain
non-recurring costs. Prior to the third quarter of 2024, only
equity-based compensation for Replacement Restricted Stock Units
(“RSUs”) and Earnout Right RSUs were included in our adjustments.
As a result of this change, prior period amounts have been recast
to reflect the updated presentation. Adjusted net loss decreased $1
million for the three months ended June 30, 2024 and $1 million and
$2 million for the three and nine months ended September 30, 2023,
respectively, from what was previously reported. The change also
resulted in a decrease to adjusted loss per share of $0.05 for the
three months ended June 30, 2024 and $0.05 and $0.13 for the three
and nine months ended September 30, 2023, respectively, from what
was previously reported.
(5)
Reflects certain non-recurring
costs and adjustments that management believes should be excluded
as these do not relate to a recurring part of the core business
operations. These items include amounts recognized for settlement
of legal and regulatory matters, acquisition or divestiture-related
expenses, and other one-time charges.
(6)
Pro-forma income tax provision
(benefit) adjustments to apply an effective combined corporate tax
rate to adjusted net income (loss) before taxes.
(7)
Calculated on an if-converted
basis except when anti-dilutive.
(unaudited)
Adjusted Net Income by Segment
(Continuing Operations)
For the three months ended September
30, 2024
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
16
$
217
$
(24
)
$
208
Adjustments for:
Changes in fair value(2)
—
(200
)
2
(198
)
Amortization or impairment of intangibles
and impairment of other assets(3)
9
—
—
9
Equity-based compensation(4)
—
—
1
2
Adjusted net income (loss) before
taxes
$
25
$
17
$
(21
)
$
21
Provision (benefit) for income
taxes(6)
7
4
(5
)
6
Adjusted net income (loss)
$
19
$
12
$
(16
)
$
15
Weighted average share count
23,159,304
23,159,304
23,159,304
23,159,304
Adjusted earnings (loss) per
share
$
0.81
$
0.53
$
(0.67
)
$
0.67
For the three months ended June 30,
2024
($ 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
Equity-based compensation(4)
—
—
1
1
Certain non-recurring costs(5)
1
—
1
2
Adjusted net income (loss) before
taxes
$
9
$
16
$
(24
)
$
—
Provision (benefit) for income
taxes(6)
2
4
(6
)
—
Adjusted net income (loss)
$
7
$
12
$
(18
)
$
—
Weighted average share count
23,084,189
23,084,189
23,084,189
23,084,189
Adjusted earnings (loss) per
share
$
0.27
$
0.52
$
(0.77
)
$
—
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 or impairment of intangibles
and impairment of other assets(3)
9
—
—
9
Equity-based compensation(4)
1
1
3
5
Certain non-recurring costs(5)
1
—
4
6
Adjusted net income (loss) before
taxes
$
(8
)
$
1
$
(24
)
$
(32
)
Benefit for income taxes(6)
(2
)
—
(6
)
(8
)
Adjusted net income (loss)
$
(6
)
$
1
$
(18
)
$
(24
)
Weighted average share count
22,916,628
22,916,628
22,916,628
22,916,628
Adjusted earnings (loss) per
share
$
(0.26
)
$
0.04
$
(0.80
)
$
(1.03
)
For the nine months ended September 30,
2024
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
10
$
253
$
(74
)
$
189
Adjustments for:
Changes in fair value(2)
—
(214
)
(2
)
(216
)
Amortization or impairment of intangibles
and impairment of other assets(3)
28
—
1
28
Equity-based compensation(4)
1
1
6
7
Certain non-recurring costs(5)
1
—
2
4
Adjusted net income (loss) before
taxes
$
41
$
40
$
(68
)
$
12
Provision (benefit) for income
taxes(6)
11
11
(18
)
4
Adjusted net income (loss)
$
30
$
30
$
(51
)
$
9
Weighted average share count
23,062,616
23,062,616
23,062,616
23,062,616
Adjusted earnings (loss) per
share
$
1.30
$
1.28
$
(2.20
)
$
0.38
For the nine months ended September 30,
2023
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax loss
$
(47
)
$
(193
)
$
(98
)
$
(338
)
Adjustments for:
Changes in fair value(2)
—
200
(3
)
197
Amortization or impairment of intangibles
and impairment of other assets(3)
28
—
—
28
Equity-based compensation(4)
3
1
10
14
Certain non-recurring costs(5)
3
1
8
12
Adjusted net income (loss) before
taxes
$
(13
)
$
9
$
(83
)
$
(86
)
Provision (benefit) for income
taxes(6)
(3
)
2
(22
)
(23
)
Adjusted net income (loss)
$
(10
)
$
7
$
(61
)
$
(64
)
Weighted average share count
21,559,717
21,559,717
21,559,717
21,559,717
Adjusted earnings (loss) per
share
$
(0.43
)
$
0.30
$
(2.82
)
$
(2.95
)
(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.
(4)
Beginning with the third quarter
of 2024, the Company revised our definitions of adjusted net income
(loss), adjusted EBITDA, and adjusted earnings (loss) per share to
now adjust for all non-cash equity-based compensation in this line
item, excluding forfeitures and accelerations associated with
restructuring activities, which are included in certain
non-recurring costs. Prior to the third quarter of 2024, only
equity-based compensation for Replacement RSUs and Earnout Right
RSUs were included in our adjustments. As a result of this change,
prior period amounts have been recast to reflect the updated
presentation.
(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 Wednesday,
November 6th at 5:00 pm Eastern Time to discuss the Company’s
results for the third quarter ended September 30, 2024. 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://ir.financeofamericacompanies.com/.
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 November 20, 2024. To access the replay,
visit the “Investors” section of the Company’s website at
https://ir.financeofamericacompanies.com/. The replay can also be
accessed by dialing 1-800-770-2030 (United States) or
1-609-800-9909 (International). The replay pin number is
5706924.
About Finance of America
Finance of America (NYSE: FOA) is a leading provider of home
equity-based financing solutions for a modern retirement. In
addition, Finance of America offers capital markets and portfolio
management capabilities primarily to optimize the distribution of
its originated loans to investors. Finance of America is
headquartered in Plano, Texas. For more information, please visit
www.financeofamericacompanies.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 the Company’s beliefs
regarding future events, many of which, by their nature, are
inherently uncertain and outside of the Company’s control. These
statements include, but are not limited to, statements related to
our expectations regarding the performance of our business, our
financial results, our liquidity and capital resources, and other
non-historical statements. In some cases, you can identify these
forward-looking statements by the use of words such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“should,” “could,” “seeks,” “projects,” “predicts,” “intends,”
“plans,” “estimates,” “budgets,” “forecasts,” “anticipates,” or the
negative version of these words or other comparable words. Such
forward-looking statements are subject to various risks and
uncertainties that could cause actual outcomes or results to differ
materially from those indicated in these statements, including
those risks described below. 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 the Company or any other person that the results
or conditions described in such statements or the Company’s
objectives and plans will be achieved. 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. 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,
2023, filed with the U.S. Securities and Exchange Commission (the
“SEC”) on March 15, 2024, 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 earnings
before interest, taxes, depreciation, and amortization (“EBITDA”),
and adjusted earnings (loss) per share.
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 U.S. 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 condensed consolidated financial
statements are cautioned not to place undue reliance on our
non-GAAP financial measures.
Change in Non-GAAP Measures
Prior to the third quarter of 2024, the Company’s adjusted net
income (loss), adjusted EBITDA, and adjusted earnings (loss) per
share were adjusted for equity-based compensation for only the
Replacement Restricted RSUs and Earnout Right RSUs. Beginning with
the third quarter of 2024, the Company revised our definitions of
adjusted net income (loss), adjusted EBITDA, and adjusted earnings
(loss) per share to now adjust for all non-cash equity-based
compensation in the aforementioned non-GAAP measures. As a result
of the change, prior period amounts have been recast to reflect the
updated presentation.
Subsequent to granting the Replacement RSUs and Earnout Right
RSUs, the Company has granted other equity-based awards. As these
awards are non-cash expenses that are not directly correlated with
operating results, the Company believes that analysts, investors,
and other users of the financial statements may find this change
beneficial when analyzing our operating performance and
comparability to peers.
Adjusted Net Income (Loss)
We define adjusted net income (loss) as consolidated net income
(loss) from continuing operations adjusted for:
- Income taxes
- 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, excluding forfeitures and
accelerations associated with restructuring activities, which are
included in certain non-recurring costs.
- 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 benefit (provision) adjustments to apply
an effective combined corporate tax rate to adjusted net income
(loss) before taxes.
Management considers adjusted net income (loss) important in
evaluating our Company as a whole. This supplemental metric is
utilized by our management team to assess the underlying key
drivers and operational performance of the continuing operations of
the business. In addition, analysts, investors, and creditors may
use this measure when analyzing our operating performance and
comparability to peers. Adjusted net income (loss) is not a
presentation made in accordance with U.S. GAAP, and our definition
and use of this measure may vary from other companies in our
industry.
Adjusted net income (loss) provides visibility to the underlying
operating performance by excluding the impact of certain items that
management does not believe are representative of our core
earnings. Adjusted net income (loss) may also include other
adjustments, as applicable, based upon facts and circumstances,
consistent with our intent of providing a supplemental means of
evaluating our operating performance.
Adjusted EBITDA
We define adjusted EBITDA as net income (loss) from continuing
operations adjusted for:
- Income taxes
- Change 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 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, excluding forfeitures and
accelerations associated with restructuring activities, which are
included in certain non-recurring costs.
- 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.
- Depreciation
- Interest expense on non-funding debt
We evaluate the performance of our company and segments through
the use of adjusted EBITDA as a non-GAAP measure. Management
considers adjusted EBITDA important in evaluating the Company as a
whole. Adjusted EBITDA is a supplemental metric utilized by our
management team to assess the underlying key drivers and
operational performance of the continuing operations of the
business. In addition, analysts, investors, and creditors may use
this measure when analyzing our operating performance. Adjusted
EBITDA is not a presentation made in accordance with U.S. GAAP, and
our use of this measure and term may vary from other companies in
our industry.
Adjusted EBITDA provides visibility to the underlying operating
performance by excluding the impact of certain items that
management does not believe are representative of our core
earnings. Adjusted EBITDA may also include other adjustments, as
applicable, based upon facts and circumstances, consistent with our
intent of providing a supplemental means of evaluating our
operating performance.
Adjusted Earnings (Loss) Per Share
We define adjusted earnings (loss) per share as adjusted net
income (loss) (defined above) divided by the weighted average
outstanding shares, which includes outstanding Class A Common Stock
plus the Class A Units of Finance of America Equity Capital owned
by the noncontrolling interest on an if-converted basis and any
shares under the treasury stock method.
Analysts, investors, and creditors may use this measure when
analyzing our operating performance and comparability to peers.
Adjusted earnings (loss) per share is not a presentation made in
accordance with U.S. GAAP, and our definition and use of this
measure may vary from other companies in our industry.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241106517018/en/
For Finance of America Media: pr@financeofamerica.com For
Finance of America Investor Relations: ir@financeofamerica.com
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