– Net income from continuing operations of $171
million or $0.72 basic earnings per share for the quarter –
– 20% improvement on an adjusted net basis(1)
over the prior quarter –
– Finished the year with 37% share of HECM
Reverse market(2) –
Finance of America Companies Inc. (“Finance of America” or
the “Company”) (NYSE: FOA), a modern retirement
solutions platform, reported financial results for the quarter and
year ended December 31, 2023.
Fourth Quarter and Full Year 2023 Highlights
- Net income from continuing operations for the fourth quarter of
$171 million or $0.72 basic earnings per share primarily due to
non-cash, positive fair value changes on long-term assets and
liabilities combined with improved results from operations.
- For the quarter, the Company recognized an adjusted net loss(1)
of $20 million or $0.09 per share, an improvement of 20% over the
prior quarter.
- 67% improvement in adjusted net loss in Retirement Solutions in
the fourth quarter driven by higher revenue margin and reduced
expenses compared to the prior quarter.
- For the full year, our subsidiary, Finance of America Reverse
maintained 37% share of the HECM Reverse market.(2)
(1) See the sections titled “Reconciliation to GAAP” and
“Non-GAAP Financial Measures” for reconciliations to the most
directly comparable GAAP measures and other important disclosures.
(2) Source:
https://www.newviewadvisors.com/commentary/2023-full-year-hmbs-issuer-league-tables/;
measured by HMBS issuance.
Graham A. Fleming, Chief Executive Officer commented, “2023 was
a transformational period for Finance of America and I want to
thank our entire team for their hard work and determination over
the course of the year. We completed a series of strategic
transactions that helped establish the Company as the preeminent
platform for homeowners 55 and older seeking to benefit from their
home equity. With most of these efforts now behind us, we are
excited to move forward. As a business, we are firmly positioned as
the leading provider of modern retirement solutions with the
potential to reach tens of millions of customers nationwide.”
Fourth Quarter Financial Summary of Continuing
Operations
($ amounts in millions, except per share
data)
Variance (%)
Variance (%)
Variance (%)
Q4'23
Q3'23
Q4'23 vs Q3'23
Q4'22
Q4'23 vs Q4'22
2023
2022
2023 vs 2022
Funded volume
$
446
$
512
(13
)%
$
701
(36
)%
$
1,762
$
5,076
(65
)%
Total revenues
276
(70
)
494
%
65
325
%
234
53
342
%
Total expenses and other, net
95
102
(7
)%
107
(11
)%
392
386
2
%
Pre-tax income (loss) from continuing
operations
172
(173
)
199
%
(48
)
458
%
(167
)
(343
)
51
%
Net income (loss) from continuing
operations
171
(172
)
199
%
(49
)
449
%
(166
)
(326
)
49
%
Adjusted net income (loss)(1)
(20
)
(25
)
20
%
(5
)
(300
)%
(87
)
54
(261
)%
Adjusted EBITDA(1)
(18
)
(25
)
28
%
1
(1,900
)%
(82
)
107
(177
)%
Basic net earnings (loss) per share
$
0.72
$
(0.74
)
197
%
$
(0.22
)
427
%
$
(0.75
)
$
(1.03
)
27
%
Diluted net income (loss) per share(2)
$
0.55
$
(0.74
)
174
%
$
(0.22
)
350
%
$
(0.75
)
$
(1.58
)
53
%
Adjusted earnings (loss) per share(1)
$
(0.09
)
$
(0.11
)
18
%
$
(0.03
)
(200
)%
$
(0.40
)
$
0.29
(238
)%
(1) See the sections titled “Reconciliation to GAAP” and
“Non-GAAP Financial Measures” for reconciliations to the most
directly comparable GAAP measures and other important disclosures.
(2) Calculated on an if-converted basis except when
anti-dilutive.
Balance Sheet Highlights
($ amounts in millions)
December 31,
September 30,
Variance (%)
2023
2023
Q4 2023 vs. Q3 2023
Cash and cash equivalents
$
46
$
66
(30
)%
Securitized loans held for investment
(HMBS & nonrecourse)
25,821
25,098
3
%
Total assets
27,108
26,397
3
%
Total liabilities
26,835
26,294
2
%
Total equity
272
104
162
%
- Ended the fourth quarter with cash and cash equivalents from
continuing operations of $46 million. The decrease in cash was
attributable to investments in our balance sheet related to
non-agency production.
- Securitized loans held for investment (HMBS & nonrecourse)
increased 3% as new production combined with the positive change in
fair value related to market rates and spreads.
- Total assets increased 3% in line with the change in
securitized loans held for investment.
- Total liabilities increased $541 million on a
sequential-quarter basis primarily due to increases in HMBS
obligations and nonrecourse debt, aligned to the change in
securitized loans held for investment.
Segment Results
Retirement Solutions
The Retirement Solutions segment primarily generates revenue and
earnings in the form of net origination gains and origination fees
earned on the origination of reverse mortgage loans.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q4'23
Q3'23
Q4'23 vs Q3'23
Q4'22
Q4'23 vs Q4'22
2023
2022
2023 vs 2022
Funded volume
$
446
$
512
(13
)%
$
701
(36
)%
$
1,762
$
5,076
(65
)%
Total revenue
41
40
3
%
32
28
%
149
300
(50
)%
Pre-tax income (loss)
(13
)
(20
)
35
%
(13
)
—
%
(60
)
117
(151
)%
Adjusted net income (loss)
(2
)
(6
)
67
%
4
(150
)%
(12
)
122
(110
)%
- Funded volume decreased 13% quarter over quarter due to minimal
Home Improvement production, as a result of the continued wind-down
of the Home Improvement business, seasonality and the commencement
of a loan origination system migration in December. Within our
Reverse business, funded volume decreased to $436 million, or down
7% from the prior quarter.
- Fourth quarter revenue increased 3% from the third quarter to
$41 million as seasonal volume declines were more than offset by
increased margins in our Reverse business.
Portfolio Management
The Portfolio Management segment generates revenue and earnings
in the form of fair value gains or losses, gain on sale of loans,
interest income, servicing income, fees for underwriting, advisory
and valuation services and other ancillary fees.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q4'23
Q3'23
Q4'23 vs Q3'23
Q4'22
Q4'23 vs Q4'22
2023
2022
2023 vs 2022
Assets under management
$
26,773
$
26,023
3
%
$
20,186
33
%
$
26,773
$
20,186
33
%
Assets excluding HMBS and nonrecourse
obligations
1,515
1,232
23
%
1,846
(18
)%
1,515
1,846
(18
)%
Total revenue
240
(103
)
333
%
30
700
%
115
(220
)
152
%
Pre-tax income (loss)
217
(124
)
275
%
3
7133
%
25
(347
)
107
%
Adjusted net income
—
—
—
%
7
(100
)%
6
16
(63
)%
- Fourth quarter revenue was materially impacted by positive
non-cash fair value adjustments on assets held for investment and
related liabilities, as we updated model assumptions to account for
changes in market interest rates, home price appreciation and
credit spreads during the quarter.
- Excluding these adjustments, the segment was break-even for the
quarter.
Reconciliation to GAAP
($ amounts in millions)(1)
Q4'23
Q3'23
Q4'22
2023
2022
Reconciliation of net income (loss)
from continuing operations to adjusted net income (loss) and
adjusted EBITDA
Net income (loss) from continuing
operations
$
171
$
(172
)
$
(49
)
$
(166
)
$
(326
)
Add back: Benefit (provision) for income
taxes
(1
)
1
(1
)
1
17
Net income (loss) from continuing
operations before taxes
172
(173
)
(48
)
(167
)
(343
)
Adjustments for:
Changes in fair value(2)
(221
)
120
12
(24
)
334
Amortization and impairment of intangibles
and other assets(3)
17
9
15
44
47
Share-based compensation(4)
3
3
4
13
18
Certain non-recurring costs(5)
2
6
9
14
19
Adjusted net income (loss) before
taxes
(27
)
(34
)
(7
)
(118
)
76
Benefit (provision) for income
taxes(6)
7
8
2
31
(21
)
Adjusted net income (loss)
(20
)
(25
)
(5
)
(87
)
54
Provision (benefit) for income
taxes(6)
(7
)
(8
)
(2
)
(31
)
21
Depreciation
1
1
1
5
4
Interest expense on non-funding debt
8
8
7
31
28
Adjusted EBITDA
$
(18
)
$
(25
)
$
1
$
(82
)
$
107
($ amounts in millions except shares and $
per share)
Q4'23
Q3'23
Q4'22
2023
2022
GAAP PER SHARE MEASURES
Net income (loss) from continuing
operations attributable to controlling interest
$
64
$
(65
)
$
(14
)
$
(61
)
$
(64
)
Weighted average outstanding share
count
88,425,793
87,726,231
63,204,118
81,977,533
62,298,532
Basic net income (loss) per share from
continuing operations
$
0.72
$
(0.74
)
$
(0.22
)
$
(0.75
)
$
(1.03
)
If-converted method net income (loss) from
continuing operations
$
128
$
(65
)
$
(14
)
$
(61
)
$
(298
)
Weighted average diluted share count
229,300,885
87,726,231
63,204,118
81,977,533
188,236,513
Diluted net income (loss) per share
from continuing operations(7)
$
0.55
$
(0.74
)
$
(0.22
)
$
(0.75
)
$
(1.58
)
NON-GAAP PER SHARE MEASURES
Adjusted net income (loss)
$
(20
)
$
(25
)
$
(5
)
$
(87
)
$
54
Weighted average share count
229,300,885
229,166,288
187,822,766
219,051,258
188,236,513
Adjusted earnings (loss) per
share
$
(0.09
)
$
(0.11
)
$
(0.03
)
$
(0.40
)
$
0.29
(1) Totals may not foot due to rounding. (2) Changes in fair
value include changes in fair value of loans and securities held
for investment and related obligations, deferred purchase price
obligations, contingent earnout, warrant liability, and minority
investments. (3) Includes amortization and impairment of
intangibles and impairment of certain other long-lived assets
during the periods presented. (4) Includes equity-based
compensation for Replacement Restricted Stock Units and Earnout
Right Restricted Stock Units, which are funded 100% by existing
non-controlling shareholders or outstanding Class A Common Stock.
(5) Certain non-recurring costs and adjustments that management
believes should be excluded as these do not relate to a recurring
part of the core business operations. These items include amounts
recognized for settlement of legal and regulatory matters,
acquisition or divestiture-related expenses, and other one-time
charges. (6) We applied an effective combined corporate tax rate to
adjusted consolidated pre-tax income (loss) for the respective
period to determine the tax effect of adjusted consolidated net
income (loss). (7) Calculated on an if-converted basis except when
anti-dilutive.
Adjusted Net Income by Segment (Continuing
Operations)
For the three months ended December 31,
2023
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
(13
)
$
217
$
(33
)
$
172
Adjustments for:
Changes in fair value(2)
—
(224
)
3
(221
)
Amortization and impairment of intangibles
and other assets(3)
9
6
1
17
Share-based compensation(4)
1
—
2
3
Certain non-recurring costs(5)
—
—
2
2
Adjusted net loss before taxes
$
(3
)
$
—
$
(24
)
$
(27
)
Benefit for income taxes(6)
(1
)
—
(6
)
(7
)
Adjusted net loss
$
(2
)
$
—
$
(18
)
$
(20
)
Weighted average share count
229,300,885
229,300,885
229,300,885
229,300,885
Adjusted loss per share
$
(0.01
)
$
—
$
(0.08
)
$
(0.09
)
For the three months ended September
30, 2023
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax loss
$
(20
)
$
(124
)
$
(28
)
$
(173
)
Adjustments for:
Changes in fair value(2)
—
124
(4
)
120
Amortization of intangible assets(3)
9
—
—
9
Share-based compensation(4)
1
—
2
3
Certain non-recurring costs(5)
1
—
4
6
Adjusted net loss before taxes
$
(8
)
$
—
$
(26
)
$
(34
)
Benefit for income taxes(6)
(2
)
—
(6
)
(8
)
Adjusted net loss
$
(6
)
$
—
$
(19
)
$
(25
)
Weighted average share count
229,166,288
229,166,288
229,166,288
229,166,288
Adjusted loss per share
$
(0.03
)
$
—
$
(0.08
)
$
(0.11
)
For the three months ended December 31,
2022
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
(13
)
$
3
$
(37
)
$
(48
)
Adjustments for:
Changes in fair value(2)
—
6
6
12
Amortization and impairment of intangibles
and other assets(3)
13
—
2
15
Share-based compensation(4)
1
—
2
4
Certain non-recurring costs(5)
4
—
5
9
Adjusted net income (loss) before
taxes
$
5
$
9
$
(22
)
$
(7
)
Provision (benefit) for income
taxes(6)
1
2
(6
)
(2
)
Adjusted net income (loss)
$
4
$
7
$
(16
)
$
(5
)
Weighted average share count
187,822,266
187,822,266
187,822,266
187,822,266
Adjusted earnings (loss) per
share
$
0.02
$
0.04
$
(0.09
)
$
(0.03
)
For the year ended December 31,
2023
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
(60
)
$
25
$
(132
)
$
(167
)
Adjustments for:
Changes in fair value(2)
—
(24
)
—
(24
)
Amortization and impairment of intangibles
and other assets(3)
37
6
1
44
Share-based compensation(4)
3
1
9
13
Certain non-recurring costs(5)
3
1
10
14
Adjusted net income (loss) before
taxes
$
(16
)
$
8
$
(110
)
$
(118
)
Provision (benefit) for income
taxes(6)
(4
)
2
(29
)
(31
)
Adjusted net income (loss)
$
(12
)
$
6
$
(81
)
$
(87
)
Weighted average share count
219,051,258
219,051,258
219,051,258
219,051,258
Adjusted earnings (loss) per
share
$
(0.06
)
$
0.03
$
(0.37
)
$
(0.40
)
For the year ended December 31,
2022
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
117
$
(347
)
$
(113
)
$
(343
)
Adjustments for:
Changes in fair value(2)
—
362
(28
)
334
Amortization and impairment of intangibles
and other assets(3)
41
4
2
47
Share-based compensation(4)
6
2
11
18
Certain non-recurring costs(5)
1
1
17
19
Adjusted net income (loss) before
taxes
$
165
$
22
$
(111
)
$
76
Provision (benefit) for income
taxes(6)
43
6
(29
)
21
Adjusted net income (loss)
$
122
$
16
$
(83
)
$
54
Weighted average share count
188,236,513
188,236,513
188,236,513
188,236,513
Adjusted earnings (loss) per
share
$
0.65
$
0.09
$
(0.44
)
$
0.29
(1) Totals may not foot due to rounding. (2) Changes in fair
value include changes in fair value of loans and securities held
for investment and related obligations, deferred purchase price
obligations, contingent earnout, warrant liability, and minority
investments. (3) Includes amortization and impairment of
intangibles and impairment of certain long-lived assets recognized
during the periods presented. (4) Includes equity-based
compensation for Replacement Restricted Stock Units and Earnout
Right Restricted Stock Units, which are funded 100% by existing
non-controlling shareholders or outstanding Class A Common Stock.
(5) Certain non-recurring costs and adjustments that management
believes should be excluded as these do not relate to a recurring
part of the core business operations. These items include amounts
recognized for settlement of legal and regulatory matters,
acquisition or divestiture-related expenses, and other one-time
charges. (6) We applied an effective combined corporate tax rate to
adjusted consolidated pre-tax income (loss) for the respective
period to determine the tax effect of adjusted consolidated net
income (loss).
Finance of America Companies
Inc. and Subsidiaries Selected Financial Information Consolidated
Statements of Financial Condition (In thousands, except share
data) (Unaudited)
December 31, 2023
September 30, 2023
ASSETS
Cash and cash equivalents
$
46,482
$
66,341
Restricted cash
178,319
216,273
Loans held for investment, subject to HMBS
related obligations, at fair value
17,548,763
17,185,552
Loans held for investment, subject to
nonrecourse debt, at fair value
8,272,393
7,912,759
Loans held for investment, at fair
value
575,228
467,319
Loans held for sale, at fair value
4,246
23,956
Intangible assets, net
253,531
269,228
Other assets, net
221,907
247,678
Assets of discontinued operations
6,721
8,356
TOTAL ASSETS
$
27,107,590
$
26,397,462
LIABILITIES AND EQUITY
HMBS related obligations, at fair
value
$
17,353,720
$
16,978,168
Nonrecourse debt, at fair value
7,904,200
7,812,570
Other financing lines of credit
928,479
852,813
Notes payable, net (includes amounts due
to related parties of $59,130 and $59,130, respectively)
410,911
411,124
Payables and other liabilities
219,569
220,818
Liabilities of discontinued operations
18,304
18,360
TOTAL LIABILITIES
26,835,183
26,293,853
EQUITY
Class A Common Stock, $0.0001 par value;
6,000,000,000 shares authorized; 100,599,241 and 92,038,371 shares
issued, respectively, and 96,340,741 and 87,779,871 shares
outstanding, respectively
10
9
Class B Common Stock, $0.0001 par value;
1,000,000 shares authorized; 15 and 15 shares issued and
outstanding, respectively
—
—
Additional paid-in capital
946,929
940,717
Accumulated deficit
(714,383
)
(775,744
)
Accumulated other comprehensive loss
(249
)
(221
)
Noncontrolling interest
40,100
(61,152
)
TOTAL EQUITY
272,407
103,609
TOTAL LIABILITIES AND EQUITY
$
27,107,590
$
26,397,462
Finance of America Companies
Inc. and Subsidiaries
Selected Financial
Information
Consolidated Statements of
Operations (In thousands, except share data)
(Unaudited)
Q4'23
Q3'23
Q4'22
2023
2022
REVENUES
Net fair value gains (losses) on loans and
related obligations
$
292,203
$
(53,135
)
$
94,598
$
322,329
$
89,489
Fee income
10,073
13,201
9,590
43,450
81,815
Loss on sale and other income from loans
held for sale, net
(1,530
)
(6,984
)
(5,689
)
(24,994
)
(5,931
)
Net interest expense:
Interest income
2,459
4,443
718
12,193
6,038
Interest expense
(27,473
)
(27,965
)
(34,610
)
(118,728
)
(118,649
)
Net interest expense
(25,014
)
(23,522
)
(33,892
)
(106,535
)
(112,611
)
TOTAL REVENUES
275,732
(70,440
)
64,607
234,250
52,762
EXPENSES
Salaries, benefits, and related
expenses
37,850
48,557
43,252
178,319
206,943
Loan production and portfolio related
expenses
5,194
6,370
11,896
26,490
52,079
Loan servicing expenses
7,455
8,000
7,250
30,729
33,063
Marketing and advertising expenses
9,729
11,491
1,459
31,896
13,031
Depreciation and amortization
9,939
9,954
9,959
42,369
42,028
General and administrative expenses
22,632
21,054
27,212
82,204
71,082
TOTAL EXPENSES
92,799
105,426
101,028
392,007
418,226
IMPAIRMENT OF INTANGIBLES AND OTHER
ASSETS
(8,738
)
(558
)
(5,728
)
(9,296
)
(9,528
)
OTHER, NET
(2,641
)
3,853
(5,614
)
211
31,992
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
171,554
(172,571
)
(47,763
)
(166,842
)
(343,000
)
Provision (benefit) for income taxes from
continuing operations
193
(103
)
1,282
(593
)
(17,132
)
NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
171,361
(172,468
)
(49,045
)
(166,249
)
(325,868
)
NET LOSS FROM DISCONTINUED
OPERATIONS
(6,698
)
(2,464
)
(132,965
)
(51,909
)
(389,660
)
NET INCOME (LOSS)
164,663
(174,932
)
(182,010
)
(218,158
)
(715,528
)
Noncontrolling interest
103,302
(109,569
)
(124,987
)
(138,070
)
(524,846
)
NET INCOME (LOSS) ATTRIBUTABLE TO
CONTROLLING INTEREST
$
61,361
$
(65,363
)
$
(57,023
)
$
(80,088
)
$
(190,682
)
EARNINGS PER SHARE
Basic weighted average shares
outstanding
88,425,793
87,726,231
63,204,118
81,977,533
62,298,532
Basic net income (loss) per share from
continuing operations
$
0.72
$
(0.74
)
$
(0.22
)
$
(0.75
)
$
(1.03
)
Basic net income (loss) per share
$
0.69
$
(0.75
)
$
(0.90
)
$
(0.98
)
$
(3.06
)
Diluted weighted average shares
outstanding
229,300,885
87,726,231
63,204,118
81,977,533
188,236,513
Diluted net income (loss) per share from
continuing operations
$
0.55
$
(0.74
)
$
(0.22
)
$
(0.75
)
$
(1.58
)
Diluted net income (loss) per share
$
0.53
$
(0.75
)
$
(0.90
)
$
(0.98
)
$
(3.12
)
Webcast and Conference Call
Management will host a webcast and conference call on Wednesday,
March 6th at 5:00 pm Eastern Time to discuss the Company’s results
for the fourth quarter and full year ended December 31, 2023. A
copy of this press release will be posted prior to the call under
the “Investors” section on Finance of America’s website at
https://www.financeofamerica.com/investors.
To listen to the audio webcast of the conference call, please
visit the “Investors” section of the Company's website at
https://www.financeofamerica.com/investors. The conference call can
also be accessed by dialing the following:
- 1-800-715-9871 (Domestic)
- 1-646-307-1963 (International)
- Conference ID: 5706924
Replay
A replay of the call will also be available on the Company's
website approximately two hours after the conclusion of the
conference call until March 20, 2024. To access the replay, dial
1-800-770-2030 (United States) or 1-646-307-1963 (International).
The replay pin number is 5706924. The replay can also be accessed
on the “Investors” section of the Company's website at
https://www.financeofamerica.com/investors.
About Finance of America
Finance of America (NYSE: FOA) is a modern retirement solutions
platform that provides customers with access to an innovative range
of retirement offerings centered on the home. In addition, FOA
offers capital markets and portfolio management capabilities
primarily to optimize the distribution of its originated loans to
investors. FOA is headquartered in Plano, Texas. For more
information, please visit www.financeofamerica.com.
Forward-Looking Statements
This release includes “forward-looking statements” within the
meaning of the “safe harbor” provisions of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements are not historical facts or statements of current
conditions, but instead represent only management’s beliefs
regarding future events, many of which, by their nature, are
inherently uncertain and outside of the Company’s control. It is
possible that our actual results, financial condition and liquidity
may differ, possibly materially, from the anticipated results,
financial condition and liquidity in these forward-looking
statements. The Company’s actual results may differ from its
expectations, estimates, and projections and, consequently, you
should not rely on these forward-looking statements as predictions
of future events. Words such as “expect,” “estimate,” “project,”
“budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,”
“will,” “could,” “should,” “believes,” “predicts,” “potential,”
“continue,” and similar expressions (or the negative versions of
such words or expressions) are intended to identify such
forward-looking statements. The Company cautions readers not to
place undue reliance upon any forward-looking statements, which are
current only as of the date of this release. Results for any
specified quarter are not necessarily indicative of the results
that may be expected for the full year or any future period. The
Company does not undertake or accept any obligation or undertaking
to release publicly any updates or revisions to any forward-looking
statements to reflect any change in its expectations or any change
in events, conditions, or circumstances on which any such statement
is based, except as required by law. All subsequent written and
oral forward-looking statements concerning the Company or other
matters and attributable to the Company or any person acting on its
behalf are expressly qualified in their entirety by the cautionary
statements above. Readers are cautioned not to place undue reliance
upon any forward-looking statements, which speak only as of the
date made. A number of important factors exist that could cause
future results to differ materially from historical performance and
these forward-looking statements. Factors that might cause such a
difference include, but are not limited to: our ability to manage
the unique challenges presented by operating as a modern retirement
solutions platform rather than a vertically-integrated, diversified
lending and complementary services platform due to the
transformation of our business; our ability to successfully operate
the recently integrated lending platform that we acquired from
American Advisors Group in March 2023 and generally, our ability to
operate our business profitably; our ability to respond to
significant changes in prevailing interest rates and to resume
profitable business operations; our geographic market concentration
if the economic conditions in our current markets should decline or
if our current markets are impacted by natural disasters; our use
of estimates in measuring or determining the fair value of the
majority of our financial assets and liabilities, which may require
us to write down the value of these assets or write up the value of
these liabilities if the estimates prove to be incorrect; our
ability to prevent cyber intrusions and mitigate cyber risks; the
possibility that the Company may be adversely affected by other
economic, business and/or competitive factors in our business
markets and worldwide financial markets, including a sustained
period of higher interest rates; our ability to manage changes in
our licensing status, business relationships or servicing
guidelines with the Government National Mortgage Association, the
United States Department of Housing and Urban Development or other
governmental entities; our ability to obtain sufficient capital and
liquidity to meet the financing and operational requirements of our
business and our ability to comply with our debt agreements,
including warehouse lending facilities, and pay down our
substantial debt; our ability to refinance our debt on reasonable
terms as it becomes due; our ability to manage disruptions in the
secondary home loan market, including the mortgage-backed
securities market; our ability to finance and recover costs of our
reverse mortgage servicing operations; our ability to maintain
compliance with the extensive regulations we are subject to,
including consumer protection laws applicable to reverse mortgage
lenders, which may be highly complex; our ability to compete with
national banks, which are not subject to state licensing and
operational requirements; our ability to manage various legal
proceedings, federal or state governmental examinations and
enforcement investigations we are subject to from time to time, the
results of which are difficult to predict or estimate; our
continued ability to remain in compliance with the terms of the
consent orders issued by the Consumer Financial Protection Bureau,
which we assumed in connection with our acquisition of operational
assets from American Advisors Group; our holding company status and
dependency on distributions from Finance of America Equity Capital
LLC; our ability to comply with the continued listing standards of
the New York Stock Exchange (“NYSE”) and avoid the delisting of our
common stock from trading on its exchange; our common stock trading
history has been characterized by low trading volume, which may
result in an inability to sell your shares at a desired price, if
at all; and our “controlled company” status under NYSE rules, which
exempts us from certain corporate governance requirements and
affords stockholders fewer protections.
All of these factors are difficult to predict, contain
uncertainties that may materially affect actual results and may be
beyond our control. New factors emerge from time to time, and it is
not possible for our management to predict all such factors or to
assess the effect of each such new factor on our business. Although
we believe that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions
could be inaccurate, and any of these statements included herein
may prove to be inaccurate. Given the significant uncertainties
inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a
representation by us or any other person that the results or
conditions described in such statements, or our objectives and
plans will be achieved. Please refer to “Risk Factors” included in
our Annual Report on Form 10-K for the year ended December 31,
2022, filed with the Securities and Exchange Commission (the “SEC”)
on March 16, 2023, for further information on these and other risk
factors affecting us, as such factors may be amended and updated
from time to time in the Company’s subsequent periodic filings with
the SEC, which are accessible on the SEC’s website at
www.sec.gov.
Non-GAAP Financial Measures
The Company’s management evaluates performance of the Company
through the use of certain measures that are not prepared in
accordance with U.S. Generally Accepted Accounting Principles
(“GAAP”), including Adjusted Net Income (Loss), Adjusted EBITDA,
and Adjusted Earnings (Loss) per Share.
We define Adjusted Net Income (Loss) as net income (loss) from
continuing operations adjusted for changes in fair value of loans
and securities held for investment and related obligations due to
assumption changes, deferred purchase price obligations (including
earnouts and Tax Receivable Agreement (“TRA”) obligations),
contingent earnout, warrant liability, and minority investments,
amortization and impairment of intangibles and other assets,
equity-based compensation, certain non-recurring costs, and
pro-forma income tax provision adjustments to apply an effective
combined corporate tax rate to adjusted consolidated pre-tax income
(loss) from continuing operations.
We define Adjusted EBITDA as Adjusted Net Income (Loss) (defined
above) adjusted for taxes, interest on non-funding debt, and
depreciation.
We define Adjusted Earnings (Loss) Per Share as Adjusted Net
Income (Loss) (defined above) divided by our weighted average
outstanding shares, which includes our outstanding Class A Common
Stock plus Finance of America Equity Capital LLC’s Class A LLC
units owned by our noncontrolling interests on an if-converted
basis.
The presentation of non-GAAP measures is used to enhance
investors’ understanding of certain aspects of our financial
performance. This discussion is not meant to be considered in
isolation, superior to, or as a substitute for the directly
comparable financial measures prepared in accordance with U.S.
GAAP. Management believes these key financial measures provide an
additional view of our performance over the long-term and provide
useful information that we use in order to maintain and grow our
business.
These non-GAAP financial measures should not be considered as an
alternative to net income (loss), operating cash flows, or any
other performance measures determined in accordance with U.S. GAAP.
Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Earnings
(Loss) per Share have important limitations as analytical tools and
should not be considered in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of the
limitations of these metrics are: (i) cash expenditures for future
contractual commitments; (ii) cash requirements for working capital
needs; (iii) cash requirements for certain tax payments; and (iv)
all non-cash income/expense items.
Because of these limitations, Adjusted Net Income (Loss),
Adjusted EBITDA, and Adjusted Earnings (Loss) per Share should not
be considered as measures of discretionary cash available to us to
invest in the growth of our business or distribute to shareholders.
We compensate for these limitations by relying primarily on our
U.S. GAAP results and using our non-GAAP financial measures only as
a supplement. Users of our consolidated financial statements are
cautioned not to place undue reliance on our non-GAAP financial
measures.
A reconciliation of our forward-looking Adjusted Earnings per
Share outlook to GAAP Earnings per Share and Net Income cannot be
provided without unreasonable effort because of the inherent
difficulty of accurately forecasting the occurrence and financial
impact of the various adjusted items necessary for such
reconciliation that have not yet occurred, are out of our control,
or cannot be reasonably predicted. For the same reasons, the
Company is unable to assess the probable significance of the
unavailable information, which could have a material impact on its
future GAAP financial results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240306578461/en/
For Finance of America Media: pr@financeofamerica.com For
Finance of America Investor Relations: ir@financeofamerica.com
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