– Net loss from continuing operations of $5
million or $0.20 basic loss per share for the quarter –
– Announced Exchange Offer Support Agreement
and reverse stock split –
– Adjusted EBITDA for the quarter of $9 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 June 30, 2024.
Second Quarter 2024 Highlights
- Net loss from continuing operations for the second quarter of
$5 million or $0.20 basic loss per share.
- For the quarter, the Company recognized an adjusted net loss(1)
of $1 million or $0.05 per share.
- The second quarter 2024 marks the fourth consecutive quarter of
improved operating performance on an adjusted net basis.
- Adjusted EBITDA for the quarter of $9 million represents the
first positive quarter since 2022.
- Announced Exchange Offer Support Agreement and that holders of
over 93% of our senior unsecured notes had indicated their intent
to participate in the exchange offer. Currently over 99% of holders
of our senior unsecured notes have indicated their intent to
participate in the exchange offer.
- Announced reverse stock split in June 2024 and completed
reverse stock split in July 2024, bringing FOA back into compliance
with NYSE continued listing standards.
(1) See the sections titled “Reconciliation to GAAP” and
“Non-GAAP Financial Measures” for reconciliations to the most
directly comparable GAAP measures and other important
disclosures.
Graham A. Fleming, Chief Executive Officer commented, “I am
proud of what Finance of America accomplished during the second
quarter and excited for these recent developments to deliver
improved fundamentals across the business. We sincerely appreciate
all the hard work of our entire team and I want to share a huge
thank you to everyone that has been a part of our company’s
transformation over the last two years.”
Second Quarter Financial Summary of Continuing
Operations
($ amounts in millions, except per share
data)
Variance (%)
Variance (%)
Variance (%)
Q2'24
Q1'24
Q2'24 vs Q1'24
Q2'23
Q2'24 vs Q2'23
YTD 2024
YTD 2023
2024 vs 2023
Funded volume
$
447
$
424
5
%
$
447
—
%
$
871
$
804
8
%
Total revenues
79
75
5
%
(112
)
171
%
154
29
431
%
Total expenses and other, net
83
90
(8
)%
112
(26
)%
173
195
(11
)%
Pre-tax loss from continuing
operations
(4
)
(16
)
75
%
(224
)
98
%
(20
)
(166
)
88
%
Net loss from continuing operations
(5
)
(16
)
69
%
(221
)
98
%
(21
)
(165
)
87
%
Adjusted net loss(1)
(1
)
(7
)
86
%
(26
)
96
%
(9
)
(42
)
79
%
Adjusted EBITDA(1)
9
(1
)
1000
%
(26
)
135
%
7
(38
)
118
%
Basic net loss per share
$
(0.20
)
$
(0.58
)
66
%
$
(9.11
)
98
%
$
(0.78
)
$
(8.04
)
90
%
Diluted net loss per share(2)
$
(0.29
)
$
(0.58
)
50
%
$
(9.11
)
97
%
$
(0.88
)
$
(8.04
)
89
%
Adjusted loss per share(1)
$
(0.05
)
$
(0.33
)
85
%
$
(1.16
)
96
%
$
(0.37
)
$
(2.00
)
82
%
(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)
June 30,
March 31,
Variance (%)
2024
2024
Q2'24 vs Q1'24
Cash and cash equivalents
$
47
$
48
(2
)%
Securitized loans held for investment
(HMBS & nonrecourse)
26,614
26,458
1
%
Total assets
27,974
27,684
1
%
Total liabilities
27,723
27,428
1
%
Total equity
251
256
(2
)%
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)
Q2'24
Q1'24
Q2'24 vs Q1'24
Q2'23
Q2'24 vs Q2'23
YTD 2024
YTD 2023
2024 vs 2023
Funded volume
$
447
$
424
5
%
$
447
—
%
$
871
$
804
8
%
Total revenue
47
46
2
%
41
15
%
93
67
39
%
Pre-tax loss
(2
)
(4
)
50
%
(18
)
89
%
(6
)
(27
)
78
%
Adjusted net income (loss)(1)
6
5
20
%
(5
)
220
%
11
(3
)
467
%
(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 loss of $2
million and adjusted net income of $6 million as a result of
increased volumes and reduced expenses.
- Compared to the second quarter 2023, total revenue increased by
15% primarily due to an increase in revenue margin, which led to a
220% improvement in adjusted net income.
- Total expenses decreased significantly from the second quarter
2023 from $59 million to $49 million as the business completed the
integration of the retail platform acquired from Bloom Retirement
Holdings Inc. (formerly known as American Advisors Group) and
streamlined business operations.
Portfolio Management
The Portfolio Management segment primarily generates revenue and
earnings in the form of net interest income and fair value changes
on our portfolio assets, monetized through securitization, sale, or
other financing of those assets.
Variance (%)
Variance (%)
Variance (%)
($ amounts in millions)
Q2'24
Q1'24
Q2'24 vs Q1'24
Q2'23
Q2'24 vs Q2'23
YTD 2024
YTD 2023
2024 vs 2023
Assets under management
$
27,655
$
27,357
1
%
$
26,064
6
%
$
27,655
$
26,064
6
%
Assets excluding HMBS and nonrecourse
obligations
1,624
1,632
—
%
1,605
1
%
1,624
1,605
1
%
Total revenue
41
37
11
%
(146
)
128
%
79
(22
)
459
%
Pre-tax income (loss)
22
14
57
%
(168
)
113
%
36
(69
)
152
%
Adjusted net income(1)
12
6
100
%
1
1100
%
17
6
183
%
(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 $22
million and adjusted net income of $12 million, an improvement
against the prior quarter and second quarter 2023 primarily due to
increased yield on the Company’s retained interests in securitized
loans held for investment.
- Net fair value adjustments during the second quarter totaled $6
million as changes in market interest rates were more than offset
by credit spread and home price appreciation adjustments.
Finance of America Companies Inc. Selected
Financial Information Condensed Consolidated Statements of
Financial Condition (in thousands, except share data)
(unaudited)
June 30, 2024
March 31, 2024
ASSETS
Cash and cash equivalents
$
46,509
$
48,229
Restricted cash
200,104
195,349
Loans held for investment, subject to HMBS
related obligations, at fair value
18,196,092
18,050,772
Loans held for investment, subject to
nonrecourse debt, at fair value
8,418,195
8,407,602
Loans held for investment, at fair
value
677,726
535,910
Intangible assets, net
234,936
244,233
Other assets, net
196,134
194,183
Assets of discontinued operations
4,658
7,290
TOTAL ASSETS
$
27,974,354
$
27,683,568
LIABILITIES AND EQUITY
HMBS related obligations, at fair
value
$
17,980,232
$
17,827,060
Nonrecourse debt, at fair value
8,050,708
7,897,896
Other financing lines of credit
1,073,844
1,071,191
Notes payable, net (includes amounts due
to related parties of $84,630 and $84,630, respectively)
442,971
436,193
Payables and other liabilities
157,273
174,858
Liabilities of discontinued operations
18,029
20,647
TOTAL LIABILITIES
27,723,057
27,427,845
EQUITY
Class A Common Stock, $0.0001 par value;
6,000,000,000 shares authorized; 10,344,043 and 10,082,025 shares
issued, respectively, and 9,918,193 and 9,656,175 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
951,535
950,597
Accumulated deficit
(724,010
)
(721,921
)
Accumulated other comprehensive loss
(296
)
(266
)
Noncontrolling interest
24,067
27,312
TOTAL EQUITY
251,297
255,723
TOTAL LIABILITIES AND EQUITY
$
27,974,354
$
27,683,568
Finance of America Companies Inc. Selected
Financial Information Condensed Consolidated Statements of
Financial Condition (in thousands, except share data)
(unaudited)
Q2'24
Q1'24
Q2'23
YTD 2024
YTD 2023
PORTFOLIO INTEREST INCOME
Interest income
$
478,091
$
463,979
$
414,661
$
942,070
$
725,625
Interest expense
(412,618
)
(393,804
)
(349,582
)
(806,422
)
(597,969
)
NET PORTFOLIO INTEREST INCOME
65,473
70,175
65,079
135,648
127,656
OTHER INCOME (EXPENSE)
Net origination gains
40,260
39,657
32,926
79,917
57,401
Gain on securitization of HECM tails,
net
11,031
10,726
5,604
21,757
9,995
Fair value changes from model
amortization
(47,813
)
(57,608
)
(55,238
)
(105,421
)
(105,504
)
Fair value changes from market inputs or
model assumptions
11,260
13,562
(162,410
)
24,822
(49,719
)
Net fair value changes on loans and
related obligations
14,738
6,337
(179,118
)
21,075
(87,827
)
Fee income
7,880
6,236
13,824
14,116
20,176
Gain (loss) on sale and other income from
loans held for sale, net
216
86
(4,054
)
302
(16,480
)
Non-funding interest expense, net
(9,268
)
(8,152
)
(7,628
)
(17,420
)
(14,567
)
NET OTHER INCOME (EXPENSE)
13,566
4,507
(176,976
)
18,073
(98,698
)
TOTAL REVENUES
79,039
74,682
(111,897
)
153,721
28,958
EXPENSES
Salaries, benefits, and related
expenses
35,053
39,023
51,098
74,076
91,912
Loan production and portfolio related
expenses
5,662
8,613
6,934
14,275
14,926
Loan servicing expenses
7,632
8,218
8,638
15,850
15,274
Marketing and advertising expenses
10,706
8,512
8,719
19,218
10,675
Depreciation and amortization
9,753
9,678
12,372
19,431
22,477
General and administrative expenses
16,241
17,271
22,244
33,512
38,518
TOTAL EXPENSES
85,047
91,315
110,005
176,362
193,782
IMPAIRMENT OF OTHER ASSETS
—
(600
)
—
(600
)
—
OTHER, NET
2,240
1,453
(1,937
)
3,693
(1,001
)
NET LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
(3,768
)
(15,780
)
(223,839
)
(19,548
)
(165,825
)
Provision (benefit) for income taxes from
continuing operations
1,153
—
(3,215
)
1,153
(683
)
NET LOSS FROM CONTINUING
OPERATIONS
(4,921
)
(15,780
)
(220,624
)
(20,701
)
(165,142
)
NET LOSS FROM DISCONTINUED
OPERATIONS
(203
)
(4,524
)
(1,857
)
(4,727
)
(42,747
)
NET LOSS
(5,124
)
(20,304
)
(222,481
)
(25,428
)
(207,889
)
Noncontrolling interest
(3,035
)
(12,766
)
(143,341
)
(15,801
)
(131,803
)
NET LOSS ATTRIBUTABLE TO CONTROLLING
INTEREST
$
(2,089
)
$
(7,538
)
$
(79,140
)
$
(9,627
)
$
(76,086
)
EARNINGS PER SHARE
Basic weighted average shares
outstanding
9,898,182
9,648,558
8,740,986
9,773,370
7,577,797
Basic net loss per share from continuing
operations
$
(0.20
)
$
(0.58
)
$
(9.11
)
$
(0.78
)
$
(8.04
)
Basic net loss per share
$
(0.21
)
$
(0.78
)
$
(9.05
)
$
(0.99
)
$
(10.04
)
Diluted weighted average shares
outstanding
23,084,189
9,648,558
8,740,986
23,013,742
7,577,797
Diluted net loss per share from continuing
operations
$
(0.29
)
$
(0.58
)
$
(9.11
)
$
(0.88
)
$
(8.04
)
Diluted net loss per share
$
(0.30
)
$
(0.78
)
$
(9.05
)
$
(1.06
)
$
(10.04
)
(unaudited)
Reconciliation to GAAP
($ amounts in millions)(1)
Q2'24
Q1'24
Q2'23
YTD 2024
YTD 2023
Reconciliation of net loss from
continuing operations to adjusted net loss and adjusted
EBITDA
Net loss from continuing operations
$
(5
)
$
(16
)
$
(221
)
$
(21
)
$
(165
)
Add back: (Provision) benefit for income
taxes
(1
)
—
3
(1
)
1
Net loss from continuing operations before
taxes
(4
)
(16
)
(224
)
(20
)
(166
)
Adjustments for:
Changes in fair value(2)
(8
)
(9
)
171
(18
)
77
Amortization or impairment of intangibles
and impairment of other assets(3)
9
10
9
20
19
Equity-based compensation(4)
—
3
3
3
7
Certain non-recurring costs(5)
2
2
4
3
6
Adjusted net loss before taxes
(1
)
(10
)
(36
)
(12
)
(57
)
Benefit for income taxes(6)
—
2
10
3
15
Adjusted net loss
(1
)
(7
)
(26
)
(9
)
(42
)
Benefit for income taxes(6)
—
(2
)
(10
)
(3
)
(15
)
Depreciation
—
—
3
1
4
Interest expense on non-funding debt
10
8
8
18
15
Adjusted EBITDA
$
9
$
(1
)
$
(26
)
$
7
$
(38
)
($ amounts in millions except shares and $
per share)
Q2'24
Q1'24
Q2'23
YTD 2024
YTD 2023
GAAP PER SHARE MEASURES
Net loss from continuing operations
attributable to controlling interest
$
(2
)
$
(6
)
$
(80
)
$
(8
)
$
(61
)
Weighted average outstanding share
count
9,898,182
9,648,558
8,740,986
9,773,370
7,577,797
Basic net loss per share from
continuing operations
$
(0.20
)
$
(0.58
)
$
(9.11
)
$
(0.78
)
$
(8.04
)
If-converted method net loss from
continuing operations
$
(7
)
$
(6
)
$
(80
)
$
(20
)
$
(61
)
Weighted average diluted share count
23,084,189
9,648,558
8,740,986
23,013,742
7,577,797
Diluted net loss per share from
continuing operations(7)
$
(0.29
)
$
(0.58
)
$
(9.11
)
$
(0.88
)
$
(8.04
)
NON-GAAP PER SHARE MEASURES
Adjusted net loss
$
(1
)
$
(7
)
$
(26
)
$
(9
)
$
(42
)
Weighted average share count
23,084,189
22,943,295
22,899,799
23,013,742
20,870,016
Adjusted loss per share
$
(0.05
)
$
(0.33
)
$
(1.16
)
$
(0.37
)
$
(2.00
)
(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 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. As of April 1, 2024, there is no further compensation cost
associated with the Replacement Restricted Stock Units and Earnout
Right Restricted Stock Units. (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
benefit adjustments to apply an effective combined corporate tax
rate to adjusted net loss before taxes. (7) Calculated on an
if-converted basis except when anti-dilutive.
Adjusted Net Income by Segment (Continuing
Operations)
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
Certain non-recurring costs(5)
1
—
1
2
Adjusted net income (loss) before
taxes
$
8
$
16
$
(25
)
$
(1
)
Provision (benefit) for income
taxes(6)
2
4
(7
)
—
Adjusted net income (loss)
$
6
$
12
$
(18
)
$
(1
)
Weighted average share count
23,084,189
23,084,189
23,084,189
23,084,189
Adjusted earnings (loss) per
share
$
0.26
$
0.52
$
(0.78
)
$
(0.05
)
For the three months ended March 31,
2024
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax income (loss)
$
(4
)
$
14
$
(26
)
$
(16
)
Adjustments for:
Changes in fair value(2)
—
(7
)
(2
)
(9
)
Amortization or impairment of intangibles
and impairment of other assets(3)
9
—
1
10
Equity-based compensation(4)
1
—
2
3
Certain non-recurring costs(5)
—
—
2
2
Adjusted net income (loss) before
taxes
$
6
$
8
$
(24
)
$
(10
)
Provision (benefit) for income
taxes(6)
2
2
(6
)
(2
)
Adjusted net income (loss)
$
5
$
6
$
(18
)
$
(7
)
Weighted average share count
22,943,295
22,943,295
22,943,295
22,943,295
Adjusted earnings (loss) per
share
$
0.22
$
0.26
$
(0.80
)
$
(0.33
)
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 or impairment of intangibles
and impairment of other assets(3)
9
—
—
9
Equity-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
22,899,799
22,899,799
22,899,799
22,899,799
Adjusted earnings (loss) per
share
$
(0.22
)
$
0.05
$
(1.02
)
$
(1.16
)
For the six 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)
$
(6
)
$
36
$
(50
)
$
(20
)
Adjustments for:
Changes in fair value(2)
—
(14
)
(4
)
(18
)
Amortization or impairment of intangibles
and impairment of other assets(3)
19
—
1
20
Equity-based compensation(4)
1
—
2
3
Certain non-recurring costs(5)
1
—
2
3
Adjusted net income (loss) before
taxes
$
15
$
23
$
(50
)
$
(12
)
Provision (benefit) for income
taxes(6)
4
6
(13
)
(3
)
Adjusted net income (loss)
$
11
$
17
$
(37
)
$
(9
)
Weighted average share count
23,013,742
23,013,742
23,013,742
23,013,742
Adjusted earnings (loss) per
share
$
0.48
$
0.74
$
(1.61
)
$
(0.37
)
For the six months ended June 30,
2023
($ amounts in millions except shares and $
per share)(1)
Retirement
Solutions
Portfolio
Management
Corporate
& Other
FOA
Pre-tax loss
$
(27
)
$
(69
)
$
(70
)
$
(166
)
Adjustments for:
Changes in fair value(2)
—
76
1
77
Amortization or impairment of intangibles
and impairment of other assets(3)
19
—
—
19
Equity-based compensation(4)
2
1
4
7
Certain non-recurring costs(5)
2
—
4
6
Adjusted net income (loss) before
taxes
$
(4
)
$
8
$
(61
)
$
(57
)
Provision (benefit) for income
taxes(6)
(1
)
2
(16
)
(15
)
Adjusted net income (loss)
$
(3
)
$
6
$
(45
)
$
(42
)
Weighted average share count
20,870,016
20,870,016
20,870,016
20,870,016
Adjusted earnings (loss) per
share
$
(0.15
)
$
0.29
$
(2.15
)
$
(2.00
)
(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 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. As of April 1, 2024, there is no further
compensation cost associated with the Replacement Restricted Stock
Units and Earnout Right Restricted Stock Units. (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 Tuesday,
August 6th at 5:00 pm Eastern Time to discuss the Company’s results
for the second quarter ended June 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 August 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://ir.financeofamericacompanies.com/.
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 EBITDA,
and Adjusted Earnings (Loss) per Share.
We define Adjusted Net Income (Loss) as consolidated net income
(loss) from continuing operations adjusted for:
- 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 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. As of April 1, 2024, there is no further
compensation cost associated with the Replacement Restricted Stock
Units and Earnout Right Restricted Stock Units.
- 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 provision (benefit) adjustments to apply
an effective combined corporate tax rate to adjusted net income
(loss) before taxes.
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 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 consolidated financial statements are
cautioned not to place undue reliance on our non-GAAP financial
measures.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240806201475/en/
For Finance of America Media: pr@financeofamerica.com For
Finance of America Investor Relations: ir@financeofamerica.com
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