– Increased funded volumes in Reverse by 18%
quarter over quarter –
– Reduced corporate overhead expenses by 17%
quarter over quarter –
– Finished the third quarter of 2023 with over
37% share of HECM Reverse market(1) –
Finance of America Companies Inc. (“Finance of America” or
the “Company”) (NYSE: FOA), a modern retirement
solutions platform, reported financial results for the quarter
ended September 30, 2023.
Third Quarter 2023 Highlights
- Net loss from continuing operations of $172 million primarily
due to non-cash, negative fair value changes on long-term assets
and liabilities.
- For the quarter, the Company recognized an adjusted net loss(2)
of $25 million or $0.11 per share as it absorbed additional losses
on the Home Improvement platform and downward pressure on
margins.
- Completed the sale of the operational assets of the Home
Improvement platform on September 15, 2023.
- Completed the transition of the Company’s offshore fulfillment
services platform in September 2023.
- During the third quarter of 2023, our subsidiary, Finance of
America Reverse maintained over 37% share of the HECM Reverse
market.(1)
(1) Source:
https://www.newviewadvisors.com/commentary/2023q3-hmbs-issuer-league-tables-flatline/;
measured by HMBS issuance (2) See the sections titled
“Reconciliation to GAAP” and “Non-GAAP Financial Measures” for
reconciliations to the most directly comparable GAAP measures and
other important disclosures.
Graham A. Fleming, Chief Executive Officer commented, “Finance
of America remains the preeminent provider of modern retirement
solutions focused on the home. During the quarter, we continued to
execute against our strategic plan and lead the way in helping
homeowners 55 and older benefit from their growing home
equity.”
Third Quarter Financial Summary of Continuing
Operations
($ amounts in millions, except per share
data)
Variance (%)
Variance (%)
Variance (%)
Q3’23
Q2’23
Q3'23 vs Q2’23
Q3’22
Q3'23 vs Q3'22
YTD 2023
YTD 2022
2023 vs 2022
Funded volume
$
512
$
447
15
%
$
1,204
(57
)%
$
1,315
$
4,374
(70
)%
Total revenues
(70
)
(112
)
38
%
(38
)
(84
)%
(41
)
(12
)
(242
)%
Total expenses and other, net
102
112
(9
)%
72
42
%
296
280
6
%
Pre-tax loss from continuing
operations
(173
)
(224
)
23
%
(113
)
(53
)%
(338
)
(295
)
(15
)%
Net loss from continuing operations
(172
)
(221
)
22
%
(105
)
(64
)%
(338
)
(277
)
(22
)%
Adjusted net income (loss)(1)
(25
)
(26
)
4
%
16
(256
)%
(66
)
61
(208
)%
Adjusted EBITDA(1)
(25
)
(26
)
4
%
30
(183
)%
(63
)
108
(158
)%
Basic net loss per share
$
(0.74
)
$
(0.91
)
19
%
$
(0.25
)
(196
)%
$
(1.57
)
$
(0.81
)
(94
)%
Diluted net loss per share(2)
$
(0.74
)
$
(0.91
)
19
%
$
(0.46
)
(61
)%
$
(1.57
)
$
(1.21
)
(30
)%
Adjusted earnings (loss) per share(1)
$
(0.11
)
$
(0.12
)
8
%
$
0.09
(222
)%
$
(0.31
)
$
0.32
(197
)%
(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 (%)
2023
2023
Q3 2023 vs. Q2 2023
Cash and cash equivalents
$
66
$
56
18%
Securitized loans held for investment
(HMBS & nonrecourse)
25,098
24,812
1%
Total assets
26,397
26,549
(1)%
Total liabilities
26,294
26,275
—%
Total equity
104
274
(62)%
- Ended the third quarter with cash and cash equivalents from
continuing operations of $66 million. The increase in cash was
attributable to proceeds from recent transactions partially offset
by operational losses and continued de-levering of the balance
sheet.
- Securitized loans held for investment (HMBS & nonrecourse)
increased 1% as new production was offset by the change in fair
value related to market rates and spreads.
- Total assets decreased 1% in line with the change in assets
from discontinued operations.
Segment Results
Retirement Solutions
The Retirement Solutions segment generates revenue and earnings
in the form of net origination gains and origination fees earned on
the origination of reverse mortgage loans.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q3'23
Q2'23
Q3'23 vs Q2'23
Q3'22
Q3'23 vs Q3'22
YTD 2023
YTD 2022
2023 vs 2022
Funded volume
$
512
$
447
15
%
$
1,204
(57
)%
$
1,315
$
4,374
(70
)%
Total revenue
40
41
(2
)%
75
(47
)%
107
268
(60
)%
Pre-tax income (loss)
(20
)
(18
)
(11
)%
32
(163
)%
(47
)
130
(136
)%
Adjusted net income (loss)
(6
)
(5
)
(20
)%
32
(119
)%
(10
)
119
(108
)%
- Funded volume increased 15% quarter over quarter as the
investment in the retail platform and integration of American
Advisors Group platform met the continued demand for the reverse
mortgage loan product. Within our Reverse business, funded volume
increased to $470 million, or up 18% from the prior quarter.
- Third quarter revenue decreased 2% from second quarter to $40
million as higher volumes were offset by increased pressure on
margins due to the rising interest rate environment.
Portfolio Management
The Portfolio Management segment generates revenue and earnings
in the form of gain on sale of loans, fair value gains or losses,
interest income, servicing income, fees for underwriting, advisory
and valuation services and other ancillary fees.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q3’23
Q2’23
Q3'23 vs Q2'23
Q3'22
Q3'23 vs Q3'22
YTD 2023
YTD 2022
2023 vs 2022
Assets under management
$
26,023
$
26,064
—
%
$
19,871
31
%
$
26,023
$
19,871
31
%
Assets excluding HMBS and nonrecourse
obligations
1,232
1,605
(23
)%
2,560
(52
)%
1,232
2,560
(52
)%
Total revenue
(103
)
(146
)
29
%
(104
)
1
%
(125
)
(252
)
50
%
Pre-tax loss
(124
)
(168
)
26
%
(135
)
8
%
(193
)
(352
)
45
%
Adjusted net income
—
1
(100
)%
4
(100
)%
7
9
(22
)%
- Third quarter revenue was materially impacted by negative
non-cash fair value adjustments on assets held for investment and
related liabilities, as we updated model assumptions to account for
changes in market interest rates, home price appreciation and
credit spreads during the quarter.
- Excluding these adjustments, the segment was break-even for the
quarter.
Reconciliation to GAAP
($ amounts in millions)(1)
Q3'23
Q2'23
Q3'22
YTD 2023
YTD 2022
Reconciliation of net loss from
continuing operations to adjusted net income (loss) and adjusted
EBITDA
Net loss from continuing operations
$
(172
)
$
(221
)
$
(105
)
$
(338
)
$
(277
)
Add back: Benefit for income taxes
1
3
8
1
18
Net loss from continuing operations before
taxes
(173
)
(224
)
(113
)
(338
)
(295
)
Adjustments for:
Changes in fair value(2)
120
171
116
197
323
Amortization and impairment of intangible
assets(3)
9
9
13
28
32
Share-based compensation(4)
3
3
4
11
14
Certain non-recurring costs(5)
6
4
2
12
10
Adjusted net income (loss) before
taxes
(34
)
(36
)
22
(90
)
84
Benefit (provision) for income
taxes(6)
8
10
(6
)
24
(23
)
Adjusted net income (loss)
(25
)
(26
)
16
(66
)
61
Provision (benefit) for income
taxes(6)
(8
)
(10
)
6
(24
)
23
Depreciation
1
3
1
5
3
Interest expense on non-funding debt
8
8
7
23
21
Adjusted EBITDA
$
(25
)
$
(26
)
$
30
$
(63
)
$
108
OTHER KEY METRICS
Cash paid for income taxes
$
—
$
—
$
—
$
—
$
—
($ amounts in millions except shares and $
per share)
Q3'23
Q2'23
Q3'22
YTD 2023
YTD 2022
GAAP PER SHARE MEASURES
Net loss from continuing operations
attributable to controlling interest
$
(65
)
$
(80
)
$
(16
)
$
(125
)
$
(50
)
Weighted average outstanding share
count
87,726,231
87,409,861
62,804,809
79,804,493
61,993,353
Basic net loss per share from
continuing operations
$
(0.74
)
$
(0.91
)
$
(0.25
)
$
(1.57
)
$
(0.81
)
If-converted method net loss from
continuing operations
$
(65
)
$
(80
)
$
(87
)
$
(125
)
$
(228
)
Weighted average diluted share count
87,726,231
87,409,861
187,877,936
79,804,493
188,375,945
Diluted net loss per share from
continuing operations(7)
$
(0.74
)
$
(0.91
)
$
(0.46
)
$
(1.57
)
$
(1.21
)
NON-GAAP PER SHARE MEASURES
Adjusted net income (loss)
$
(25
)
$
(26
)
$
16
$
(66
)
$
61
Weighted average share count
229,166,288
228,997,995
187,877,936
215,597,172
188,375,945
Adjusted earnings (loss) per
share
$
(0.11
)
$
(0.12
)
$
0.09
$
(0.31
)
$
0.32
(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 recognized from the business combination with Replay
Acquisition Corp. (“Replay”) recognized during the periods
presented. (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 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 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 June 30,
2023
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate &
Other
FOA
Pre-tax loss
$
(18
)
$
(168
)
$
(38
)
$
(224
)
Adjustments for:
Changes in fair value(2)
—
169
2
171
Amortization of intangible assets(3)
9
—
—
9
Share-based compensation(4)
1
—
2
3
Certain non-recurring costs(5)
1
—
3
4
Adjusted net income (loss) before
taxes
$
(7
)
$
1
$
(31
)
$
(36
)
Benefit for income taxes(6)
(2
)
—
(8
)
(10
)
Adjusted net income (loss)
$
(5
)
$
1
$
(23
)
$
(26
)
Weighted average share count
228,997,995
228,997,995
228,997,995
228,997,995
Adjusted earnings (loss) per
share
$
(0.02
)
$
0.01
$
(0.10
)
$
(0.12
)
For the three months ended September
30, 2022
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate &
Other
FOA
Pre-tax income (loss)
$
32
$
(135
)
$
(10
)
$
(113
)
Adjustments for:
Changes in fair value(2)
—
136
(20
)
116
Amortization and impairment of intangible
assets(3)
9
4
—
13
Share-based compensation(4)
2
—
2
4
Certain non-recurring costs(5)
—
—
1
2
Adjusted net income (loss) before
taxes
$
43
$
5
$
(26
)
$
22
Provision (benefit) for income
taxes(6)
11
1
(7
)
6
Adjusted net income (loss)
$
32
$
4
$
(19
)
$
16
Weighted average share count
187,877,936
187,877,936
187,877,936
187,877,936
Adjusted earnings (loss) per
share
$
0.17
$
0.02
$
(0.10
)
$
0.09
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 of intangible assets(3)
28
—
—
28
Share-based compensation(4)
3
1
7
11
Certain non-recurring costs(5)
3
1
8
12
Adjusted net income (loss) before
taxes
$
(13
)
$
9
$
(85
)
$
(90
)
Provision (benefit) for income
taxes(6)
(3
)
2
(23
)
(24
)
Adjusted net income (loss)
$
(10
)
$
7
$
(62
)
$
(66
)
Weighted average share count
215,597,172
215,597,172
215,597,172
215,597,172
Adjusted earnings (loss) per
share
$
(0.05
)
$
0.03
$
(0.29
)
$
(0.31
)
For the nine months ended September 30,
2022
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate &
Other
FOA
Pre-tax income (loss)
$
130
$
(352
)
$
(73
)
$
(295
)
Adjustments for:
Changes in fair value(2)
—
357
(34
)
323
Amortization and impairment of intangible
assets(3)
28
4
—
32
Share-based compensation(4)
6
2
7
14
Certain non-recurring costs(5)
(3
)
1
12
10
Adjusted net income (loss) before
taxes
$
161
$
12
$
(88
)
$
84
Provision (benefit) for income
taxes(6)
42
3
(22
)
23
Adjusted net income (loss)
$
119
$
9
$
(66
)
$
61
Weighted average share count
188,375,945
188,375,945
188,375,945
188,375,945
Adjusted earnings (loss) per
share
$
0.63
$
0.05
$
(0.35
)
$
0.32
(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 recognized from the business combination with Replay
recognized during the periods presented. (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 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 Selected Financial Information
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data) (Unaudited)
September 30, 2023
June 30, 2023
ASSETS
Cash and cash equivalents
$
66,341
$
55,591
Restricted cash
216,273
265,542
Loans held for investment, subject to HMBS
related obligations, at fair value
17,185,552
16,883,718
Loans held for investment, subject to
nonrecourse debt, at fair value
7,912,759
7,928,414
Loans held for investment, at fair
value
467,319
685,033
Loans held for sale, at fair value
23,956
53,500
MSR, at fair value
7,944
9,456
Fixed assets and leasehold improvements,
net
8,055
8,196
Intangible assets, net
269,228
278,525
Other assets, net
231,679
256,289
Assets of discontinued operations
8,356
124,406
TOTAL ASSETS
$
26,397,462
$
26,548,670
LIABILITIES AND EQUITY
HMBS related obligations, at fair
value
$
16,978,168
$
16,665,535
Nonrecourse debt, at fair value
7,812,570
7,796,545
Other financing lines of credit
852,813
1,072,113
Payables and other liabilities
220,818
273,839
Notes payable, net (includes amounts due
to related parties of $59,130 and $59,580, respectively)
411,124
411,784
Liabilities of discontinued operations
18,360
55,119
TOTAL LIABILITIES
26,293,853
26,274,935
EQUITY
Class A Common Stock, $0.0001 par value;
6,000,000,000 shares authorized; 92,038,371 and 91,886,418 shares
issued, respectively, and 87,779,871 and 87,627,918 shares
outstanding, respectively
9
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
940,717
935,911
Accumulated deficit
(775,744
)
(710,381
)
Accumulated other comprehensive loss
(221
)
(254
)
Noncontrolling interest
(61,152
)
48,450
TOTAL EQUITY
103,609
273,735
TOTAL LIABILITIES AND EQUITY
$
26,397,462
$
26,548,670
Finance of America Companies
Inc. and Subsidiaries Selected Financial Information
Condensed Consolidated Statements of Operations (In
thousands, except share data) (Unaudited)
Q3'23
Q2'23
Q3'22
YTD 2023
YTD 2022
REVENUES
Loss on sale and other income from loans
held for sale, net
$
(6,984
)
$
(4,054
)
$
(6,508
)
$
(23,464
)
$
(242
)
Net fair value gains (losses) on loans and
related obligations
(53,135
)
(93,133
)
(10,244
)
30,126
(5,109
)
Fee income
13,201
13,824
10,212
33,377
72,225
Net interest expense:
Interest income
4,443
3,200
2,527
9,734
5,320
Interest expense
(27,965
)
(31,734
)
(33,534
)
(91,255
)
(84,039
)
Net interest expense
(23,522
)
(28,534
)
(31,007
)
(81,521
)
(78,719
)
TOTAL REVENUES
(70,440
)
(111,897
)
(37,547
)
(41,482
)
(11,845
)
EXPENSES
Salaries, benefits, and related
expenses
48,557
51,098
45,788
140,469
163,691
Occupancy, equipment rentals, and other
office related expenses
2,097
2,554
1,576
6,560
5,465
General and administrative expenses
54,772
56,353
44,987
152,179
148,042
TOTAL EXPENSES
105,426
110,005
92,351
299,208
317,198
IMPAIRMENT OF INTANGIBLES AND OTHER
ASSETS
(558
)
—
(3,800
)
(558
)
(3,800
)
OTHER, NET
3,853
(1,937
)
20,468
2,852
37,606
NET LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
(172,571
)
(223,839
)
(113,230
)
(338,396
)
(295,237
)
Benefit for income taxes from continuing
operations
(103
)
(3,215
)
(8,491
)
(786
)
(18,414
)
NET LOSS FROM CONTINUING
OPERATIONS
(172,468
)
(220,624
)
(104,739
)
(337,610
)
(276,823
)
NET LOSS FROM DISCONTINUED
OPERATIONS
(2,464
)
(1,857
)
(196,961
)
(45,211
)
(256,695
)
NET LOSS
(174,932
)
(222,481
)
(301,700
)
(382,821
)
(533,518
)
Noncontrolling interest
(109,569
)
(143,341
)
(217,214
)
(241,372
)
(399,859
)
NET LOSS ATTRIBUTABLE TO CONTROLLING
INTEREST
$
(65,363
)
$
(79,140
)
$
(84,486
)
$
(141,449
)
$
(133,659
)
EARNINGS PER SHARE
Basic weighted average shares
outstanding
87,726,231
87,409,861
62,804,809
79,804,493
61,993,353
Basic net loss per share from continuing
operations
$
(0.74
)
$
(0.91
)
$
(0.25
)
$
(1.57
)
$
(0.81
)
Basic net loss per share from discontinued
operations
$
(0.01
)
$
(0.00
)
$
(1.10
)
$
(0.20
)
$
(1.35
)
Diluted weighted average shares
outstanding
87,726,231
87,409,861
187,877,936
79,804,493
188,375,945
Diluted net loss per share from continuing
operations
$
(0.74
)
$
(0.91
)
$
(0.46
)
$
(1.57
)
$
(1.21
)
Diluted net loss per share from
discontinued operations
$
(0.01
)
$
(0.00
)
$
(0.88
)
$
(0.20
)
$
(1.13
)
Webcast and Conference Call
Management will host a webcast and conference call on Tuesday,
November 7th at 5:00 pm Eastern Time to discuss the Company’s
results for the third quarter ended September 30, 2023. A copy of
this press release will be posted prior to the call under the
“Investors” section on Finance of America’s website at
https://www.financeofamerica.com/investors.
To listen to the audio webcast of the conference call, please
visit the “Investors” section of the Company's website at
https://www.financeofamerica.com/investors. The conference call can
also be accessed by dialing the following:
- 1-888-414-4458 (Domestic)
- 1-646-960-0166 (International)
- Conference ID: 5714344
Replay
A replay of the call will also be available on the Company's
website approximately two hours after the conclusion of the
conference call through November 22, 2023. To access the replay,
dial 1-800-770-2030 (United States) or 1-647-362-9199
(International). The replay pin number is 5714344. 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 to
optimize distribution 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: the transformation of
our business from a vertically-integrated, diversified lending
platform to a modern retirement solutions platform, with access to
an innovative range of retirement offerings centered on the home;
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 and pay down our
substantial debt; our recently closed asset acquisition from
American Advisors Group and sale of our Commercial Originations and
Lender Services businesses, and their respective expected benefits
and increased liquidity, anticipated cost savings and financial and
accounting impact; our ability to successfully and timely integrate
the business of American Advisors Group into the legacy business of
the Company; 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 and increased instability
in the banking sector as a result of several recent bank failures;
our ability to respond to significant changes in prevailing
interest rates and to resume profitable business operations; 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 Ginnie Mae, HUD or
other governmental entities; 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 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 they
prove to be incorrect; our ability to manage various legal
proceedings and compliance matters, federal or state governmental
examinations and enforcement investigations we are subject to from
time to time, including consumer protection laws applicable to
reverse mortgage lenders, 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; our “controlled company” status under New York
Stock Exchange rules, which exempts us from certain corporate
governance requirements and affords stockholders fewer protections;
and 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.
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, Adjusted EBITDA, and
Adjusted Earnings per Share.
We define Adjusted Net Income as net income adjusted for change
in fair value of loans and securities held for investment and
related obligations due to assumption changes, change in fair value
of deferred purchase price obligations (including earnouts and TRA
obligations), contingent earnout, 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 Earnings Per Share as Adjusted Net Income
(defined above) divided by our weighted average share count, which
includes our outstanding Class A Common Stock shares plus Finance
of America Equity Capital LLC’s Class A LLC units owned by our
noncontrolling interests on an if-converted basis.
The presentation of non-GAAP measures is used to enhance
investors’ understanding of certain aspects of our financial
performance. This discussion is not meant to be considered in
isolation, superior to, or as a substitute for the directly
comparable financial measures prepared in accordance with GAAP.
Management believes these key financial measures provide an
additional view of our performance over the long-term and provide
useful information that we use in order to maintain and grow our
business.
These non-GAAP financial measures should not be considered as an
alternate to (i) net income (loss) or any other performance
measures determined in accordance with GAAP or (ii) operating cash
flows determined in accordance with GAAP. Adjusted Net Income,
Adjusted EBITDA, and Adjusted Earnings per Share have important
limitations as analytical tools and should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Some of the limitations of these metrics
relate to the variability of: (i) cash expenditures for future
contractual commitments; (ii) cash requirements for working capital
needs; (iii) cash requirements for certain tax payments; and (iv)
all non-cash income/expense items.
Because of these limitations, Adjusted Net Income, Adjusted
EBITDA, and Adjusted Earnings per Share should not be considered as
measures of discretionary cash available to us to invest in the
growth of our business or distribute to stockholders. We compensate
for these limitations by relying primarily on our GAAP results and
using our non-GAAP financial measures only as a supplement. Users
of our interim unaudited consolidated financial statements are
cautioned not to place undue reliance on our non-GAAP financial
measures, which are not necessarily indicative of the results that
may be expected for any future period of for the full year.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107870172/en/
For Finance of America Media: pr@financeofamerica.com For
Finance of America Investor Relations: ir@financeofamerica.com
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