8-K
Finance of America Companies Inc. (FOA)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 8, 2021
FINANCE OF AMERICA COMPANIES INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-40308 | 85-3474065 |
|---|---|---|
| (State or other jurisdiction<br> <br>of incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 909 Lake Carolyn Parkway, Suite 1550 | ||
| --- | ||
| Irving, Texas 75039 | ||
| (Address of principal executive offices, including zip code) |
Registrant’s telephone number, including area code: (972) 999-1833
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Class A Common Stock, par value $0.0001 per share | FOA | New York Stock Exchange |
| Warrants to purchase shares of Class A Common Stock | FOA.WS | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 8, 2021, Finance of America Companies Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2021. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit<br>No. | Description |
|---|---|
| 99.1* | Press Release dated November 8, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Furnished herewith. |
| --- | --- |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Finance of America Companies Inc. | ||
|---|---|---|
| Dated: November 8, 2021 | By: | /s/ Johan Gericke |
| Johan Gericke | ||
| Executive Vice President and Chief Financial Officer |
EX-99.1
Exhibit 99.1
FINANCE OF AMERICA REPORTS THIRD QUARTER 2021 RESULTS
– Delivered a strong quarter with meaningful growth across all segments –
– Year to date revenue of $1.4 billion, up 7% compared to 2020 –
– Net income for the quarter of $50 million or $0.36 per basic share and $0.22 per fully diluted share –
– Adjusted Net Income* of $75 million or $0.39 per fully diluted share –
Irving, Texas (November 8, 2021): Finance of America Companies Inc., (“Finance of America” or the “Company”) (NYSE: FOA), a high growth, consumer and specialty lending business, reported financial results for the quarter ended September 30, 2021.
Third Quarter 2021Financial Highlights
| • | Strong growth across segments generated quarterly revenues of $457 million, up 17% comparedto the second quarter |
|---|---|
| • | Mortgage Originations grew net rate lock volume and revenue by 15% and 8%, respectively, compared to the priorquarter |
| --- | --- |
| • | A second consecutive quarter of record funded volume and revenue in Reverse Originations delivered$69 million in pre-tax income, a 30% increase compared to the prior quarter |
| --- | --- |
| • | Record funded volume in Commercial Originations drove revenue andpre-tax income growth of 22% and 100%, respectively, compared to the prior quarter |
| --- | --- |
| • | Record Lender Services revenue generated pre-tax income of$9 million, up 13%, compared to the prior quarter |
| --- | --- |
| • | Net income for the quarter of $50 million or $0.36 per basic share and $0.22 per fullydiluted share |
| --- | --- |
| • | Adjusted Net Income* totaled $75 million, an increase of 32% compared to$57 million in the prior quarter |
| --- | --- |
| • | Adjusted diluted EPS* of $0.39, up 30% compared to the prior quarter |
| --- | --- |
| * | See the sections titled “Reconciliation to GAAP” and“Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures. |
| --- | --- |
“Finance of America delivered solid growth across all segments in the third quarter, demonstrating the power of our diversified platform” stated Patricia Cook, Chief Executive Officer. “We saw strong performance across all of our businesses, reinforcing our strategic goal of building a comprehensive consumer and specialty lender that is primed for growth.”
“Our Reverse business, which serves a large, under-penetrated market, generated another consecutive quarter of record revenue and pre-tax income. Our Commercial and Lender Services segments also continued their recent growth trajectories. Strong demand for single family rental loans from both borrowers and investors helped drive volume and margin expansion. The build out of our new Home Improvement business is also progressing well, and we expect it to start contributing to the bottom line in 2022.”
“We remain laser focused on building resilience into the Mortgage business and driving meaningful, sustained growth across our other specialty finance and lender services segments through further investments. Our unmatched product offering, distribution and capital markets capabilities allow us to capture substantial lifetime household value as we continue to migrate from a product to a customer-centric organization.”
1
Third Quarter Financial Summary
| Q3’21 | Q2’21 | Variance(%)Q3’21 vsQ2’21 | Q3’20 | Variance(%)Q3’21 vsQ3’20 | YTD 2021 | YTD 2020 | Variance(%)2021 vs2020 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions, except margin and per share data) | Successor | Predecessor | Combined^(1)^ | Predecessor | ||||||||||||||||
| Funded volume | $ | 8,988 | $ | 8,342 | 8 | % | $ | 9,170 | (2 | )% | $ | 26,844 | $ | 22,857 | 17 | % | ||||
| Total revenue | 457 | 389 | 17 | % | 607 | (25 | )% | 1,353 | 1,261 | 7 | % | |||||||||
| Total expenses and other, net | 402 | 403 | — | % | 365 | 10 | % | 1,187 | 914 | 30 | % | |||||||||
| Pre-tax income (loss) | 55 | (14 | ) | 493 | % | 242 | (77 | )% | 166 | 347 | (52 | )% | ||||||||
| Net income (loss) | 50 | (15 | ) | 433 | % | 242 | (79 | )% | 160 | 345 | (54 | )% | ||||||||
| Adjusted net income^(2)^ | 75 | 57 | 32 | % | 173 | (57 | )% | 239 | 307 | (22 | )% | |||||||||
| Adjusted EBITDA^(2)^ | 110 | 87 | 26 | % | 236 | (53 | )% | 351 | 424 | (17 | )% | |||||||||
| Basic earnings per share | $ | 0.36 | $ | 0.04 | 800 | % | n/a | n/a | n/a | n/a | n/a | |||||||||
| Diluted earnings per share^(3)^ | $ | 0.22 | $ | (0.05 | ) | 540 | % | $ | 1.29 | (83 | )% | $ | 0.80 | $ | 1.92 | (58 | )% | |||
| Adjusted diluted earnings per share^(3)^ | $ | 0.39 | $ | 0.30 | 30 | % | $ | 0.91 | (57 | )% | $ | 1.25 | $ | 1.61 | (22 | )% | ||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| ^(2)^ | See Reconciliation to GAAP section for a reconciliation of Adjusted Net Income and Adjusted EBITDA to Net(loss) income. | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| ^(3)^ | Calculated on an if-converted basis. See Reconciliation to GAAPsection for more detail. | |||||||||||||||||||
| --- | --- |
Balance Sheet Highlights
| September 30,2021 | June 30,2021 | Variance (%)Q3’21 vs Q2’21 | |||||
|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | ||||||
| Cash and cash equivalents | $ | 192 | $ | 157 | 22 | % | |
| Securitized loans held for investment (HMBS & nonrecourse) | 16,287 | 15,741 | 3 | % | |||
| Mortgage Servicing Rights (MSR) | 341 | 291 | 17 | % | |||
| Total assets | 22,668 | 22,228 | 2 | % | |||
| Total liabilities | 20,236 | 19,849 | 2 | % | |||
| Total equity | 2,432 | 2,379 | 2 | % | |||
| Total tangible equity^(1)^ | 441 | 377 | 17 | % | |||
| ^(1)^ | Total tangible equity calculated as Total equity less Goodwill and Intangible assets, net. | ||||||
| --- | --- | ||||||
| • | Cash and cash equivalents ended the third quarter at$192 million. The $35 million increase was primarily attributable to the successful execution of three securitizations of loans held for investment or sale during the quarter, net of investments in MSR.<br> | ||||||
| --- | --- | ||||||
| • | Total assets grew $440 million fromJune 30, 2021, primarily as a result of growth in securitized loans held for investment, capitalized MSR, and an increase in cash and cash equivalents. | ||||||
| --- | --- | ||||||
| • | Total liabilities grew $387 million ona sequential quarter basis primarily due to an increase in HMBS related obligations and nonrecourse debt of $453 million offset by a decrease in warehouse financing of $87 million. | ||||||
| --- | --- |
2
Segment Results
Mortgage Originations
The Mortgage Originations segment generates revenue through fee income from loan originations and gain on sale of mortgage loans into the secondary market.
| Q3’21 | Q2’21 | Variance(%)Q3’21 vsQ2’21 | Q3’20 | Variance(%)Q3’21 vsQ3’20 | YTD 2021 | YTD 2020 | Variance(%)2021 vs2020 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | Predecessor | Combined ^(1)^ | Predecessor | ||||||||||||||||||||
| Funded volume (Total) | $ | 7,383 | $ | 6,928 | 7 | % | $ | 8,454 | (13 | )% | $ | 22,716 | $ | 20,257 | 12 | % | ||||||||
| Funded volume (Purchase) | 3,759 | 3,495 | 8 | % | 3,023 | 24 | % | 9,918 | 6,781 | 46 | % | |||||||||||||
| Funded volume (Non-agency) | 994 | 795 | 25 | % | 293 | 239 | % | 2,826 | 791 | 257 | % | |||||||||||||
| Net rate lock volume | 7,679 | 6,669 | 15 | % | 9,286 | (17 | )% | 22,753 | 22,303 | 2 | % | |||||||||||||
| Total revenue | 235 | 218 | 8 | % | 444 | (47 | )% | 773 | 925 | (16 | )% | |||||||||||||
| Mortgage originations margin | 2.61 | % | 2.78 | % | (6 | )% | 4.39 | % | (41 | )% | 2.95 | % | 3.73 | % | (21 | )% | ||||||||
| Pre-tax income (loss) | $ | 15 | $ | (6 | ) | 350 | % | $ | 204 | (93 | )% | $ | 104 | $ | 331 | (69 | )% | |||||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | Net rate lock volume totaled $7,679 million, an increase of 15% relative to the priorquarter, driven by growth in our wholesale channel. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | Mortgage Originations Margin declined 6% relative to last quarter, driven by an increased share of wholesaleoriginations due to the full quarter impact of the recently announced Parkside acquisition. | |||||||||||||||||||||||
| --- | --- |
Reverse Originations
The Reverse Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.
| Q3’21 | Q2’21 | Variance(%)Q3’21 vsQ2’21 | Q3’20 | Variance (%)Q3’21 vsQ3’20 | YTD 2021 | YTD 2020 | Variance(%)2021 vs2020 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | Predecessor | Combined ^(1)^ | Predecessor | |||||||||||||||
| Funded volume | $ | 1,157 | $ | 1,013 | 14 | % | $ | 626 | 85 | % | $ | 2,939 | $ | 2,052 | 43 | % | |||
| Total revenue | 111 | 95 | 17 | % | 49 | 127 | % | 275 | 139 | 98 | % | ||||||||
| Pre-tax income | 69 | 53 | 30 | % | 24 | 188 | % | 168 | 74 | 127 | % | ||||||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | ||||||||||||||||||
| --- | --- | ||||||||||||||||||
| • | Funded volume and revenue of $1,157 million and $111 million,respectively, exceeded the highest levels on record set in the previous quarter. This was driven by growth in both new originations and cash-out refinances due to recent home price appreciation.<br> | ||||||||||||||||||
| --- | --- | ||||||||||||||||||
| • | As a result, Reverse Originations generated record pre-tax income of$69 million during the third quarter, 30% higher than the previous quarter. | ||||||||||||||||||
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3
Commercial Originations
The Commercial Originations segment provides business purpose lending solutions for residential real estate investors. The Commercial Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of mortgage loans.
| Q3’21 | Q2’21 | Variance(%)Q3’21 vsQ2’21 | Q3’20 | Variance(%)Q3’21 vsQ3’20 | YTD 2021 | YTD 2020 | Variance(%)2021 vs2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | Predecessor | Combined ^(1)^ | Predecessor | |||||||||||||||||
| Funded volume | $ | 448 | $ | 400 | 12 | % | $ | 90 | 398 | % | 1,189 | 548 | 117 | % | |||||||
| Total revenue | 28 | 23 | 22 | % | 5 | 460 | % | 65 | 24 | 171 | % | ||||||||||
| Pre-tax income (loss) | 6 | 3 | 100 | % | (2 | ) | 400 | % | 10 | (5 | ) | 300 | % | ||||||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| • | Funded volume of $448 million set a record for the highest quarterly volume for thesegment, eclipsing the prior quarter’s level by 12%. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| • | Revenue grew 22% quarter over quarter driven by growth in funded volume and expanding margins due to strongborrower and investor demand. | ||||||||||||||||||||
| --- | --- |
Lender Services
The Lender Services business generates revenue and earnings in the form of fees. Lender Services supports over 1,700 third party clients across the lending industry.
| Q3’21 | Q2’21 | Variance(%)Q3’21 vsQ2’21 | Q3’20 | Variance(%)Q3’21 vsQ3’20 | YTD 2021 | YTD 2020 | Variance(%)2021 vs2020 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | Predecessor | Combined ^(1)^ | Predecessor | ||||||||||||||||||||
| Total revenue | $ | 88 | $ | 81 | 9 | % | $ | 53 | 66 | % | 245 | 139 | 76 | % | ||||||||||
| % of revenue from third-party clients | 81 | % | 80 | % | 1 | % | 80 | % | 1 | % | 79 | % | 79 | % | — | % | ||||||||
| Pre-tax income | 9 | 8 | 13 | % | 8 | 13 | % | 30 | 15 | 100 | % | |||||||||||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | The Lender Services segment generated revenue of $88 million; this marks the highest levelof revenue on record for the Lender Services segment. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | We remain focused on expanding business lines to deepen cross-sell and onboarding new third-party customers todrive growth. | |||||||||||||||||||||||
| --- | --- |
4
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
| Q3’21 | Q2’21 | Variance(%)Q3’21 vsQ2’21 | Q3’20 | Variance(%)Q3’21 vsQ3’20 | YTD 2021 | YTD 2020 | Variance(%)2021 vs2020 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | Predecessor | Combined ^(1)^ | Predecessor | |||||||||||||||||||
| Assets under management | $ | 18,403 | $ | 17,966 | 2 | % | $ | 16,639 | 11 | % | 18,403 | 16,639 | 11 | % | |||||||||
| Assets excluding HMBS and non- recourse<br>obligations^(2)^ | 2,356 | 2,372 | (1 | )% | 1,904 | 24 | % | 2,356 | 1,904 | 24 | % | ||||||||||||
| Mortgage Servicing Rights (MSR) | 341 | 291 | 17 | % | 101 | 238 | % | 341 | 101 | 238 | % | ||||||||||||
| Total revenue | 10 | 7 | 43 | % | 42 | (76 | )% | 46 | 31 | 48 | % | ||||||||||||
| Pre-tax (loss) income | (20 | ) | (27 | ) | 26 | % | 19 | (205 | )% | (41 | ) | (30 | ) | 37 | % | ||||||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| ^(2)^ | Calculated for each period as Assets under management less HMBS related obligations, at fair value andnonrecourse debt, at fair value | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| • | Completed three securitizations of originations during the quarter totaling $1.2 billion,and served as co-manager on a third-party securitization totaling $0.2 billion. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| • | The decrease in revenue and pre-tax income compared to the prior yearquarter reflects the impact of fair value adjustments related predominantly to increases in modeled prepayment speeds on securitized mortgage assets and MSR. | ||||||||||||||||||||||
| --- | --- |
5
Reconciliation to GAAP
| Q3’21 | Q2’21 | Q3’20 | YTD 2021 | YTD 2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions) | Successor | Predecessor | Combined^(1)^ | Predecessor | |||||||||||
| Reconciliation of Net income (loss) to Adjusted Net income and Adjusted EBITDA | |||||||||||||||
| Net income (loss) | $ | 50 | **** | $ | (15 | ) | $ | 242 | $ | 160 | $ | 345 | |||
| Adjustments for: | |||||||||||||||
| Changes in fair value^(2)^ | **** | 20 | **** | **** | 24 | **** | (17 | ) | 55 | 54 | |||||
| Amortization and impairment of<br>intangibles^(3)^ | **** | 13 | **** | **** | 13 | **** | — | 28 | 2 | ||||||
| Equity based compensation^(4)^ | **** | 11 | **** | **** | 11 | **** | — | 21 | — | ||||||
| Certain non-recurring costs^(5)^ | **** | 3 | **** | **** | 43 | **** | 8 | 53 | 13 | ||||||
| Tax effect on net income (loss) attributable to noncontrolling interest^(6)^ | **** | (7 | ) | **** | 4 | **** | (62 | ) | (35 | ) | (89 | ) | |||
| Tax effect of adjustments^(6)^ | **** | (15 | ) | **** | (23 | ) | 2 | (43 | ) | (18 | ) | ||||
| Adjusted Net Income | $ | 75 | **** | $ | 57 | **** | $ | 173 | $ | 239 | $ | 307 | |||
| Effective income taxes | **** | 26 | **** | **** | 21 | **** | 61 | 84 | 108 | ||||||
| Depreciation | **** | 2 | **** | **** | 2 | **** | 2 | 7 | 5 | ||||||
| Interest expense on non-funding debt | **** | 7 | **** | **** | 7 | **** | — | 21 | 4 | ||||||
| Adjusted EBITDA | $ | 110 | **** | $ | 87 | **** | $ | 236 | $ | 351 | $ | 424 | |||
| OTHER KEY METRICS | |||||||||||||||
| Cash taxes paid | $ | — | **** | $ | 2 | **** | $ | 1 | $ | 2 | $ | 1 | |||
| Provision for income taxes | $ | 4 | **** | $ | 1 | **** | $ | 1 | $ | 7 | $ | 2 | |||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^(2)^ | Changes in fair value include changes in fair value of loans and securities held for investment, deferredpurchase price obligations, warrant liability, and minority investments. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^(3)^ | Successor period amortization includes amortization of intangibles recognized from the business combinationwith Replay | ||||||||||||||
| --- | --- | ||||||||||||||
| ^(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 certainone-time charges including amounts recognized for settlement of legal and regulatory matters, acquisition related expenses and other one-time charges. | ||||||||||||||
| --- | --- | ||||||||||||||
| ^(6)^ | We applied a 26% effective tax rate to pre-tax income andadjustments (excluding change in fair value of warrant liability, which is a permanent book/tax difference) for the respective period to determine the tax effect of net income (loss) and adjustments attributable to the noncontrolling interests andadjustments. | ||||||||||||||
| --- | --- |
6
| Q3’21 | Q2’21 | Q3’20 | YTD 2021 | YTD 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ amounts in millions, except shares and $ per share) | Successor | Predecessor | Combined ^(1)^ | Predecessor | |||||||
| GAAP PER SHARE MEASURES | |||||||||||
| Net income attributable to controlling interest | $ | 21 | $ | 2 | N/A | N/A | N/A | ||||
| Weighted average outstanding share count | 59,861,171 | 59,881,714 | N/A | N/A | N/A | ||||||
| Basic earnings per share | $ | 0.36 | $ | 0.04 | **** | **** | N/A | **** | N/A | **** | N/A |
| If-converted method net income (loss) | 43 | (10 | ) | 246 | 153 | 367 | |||||
| Weighted average diluted share count | 191,161,431 | 191,200,000 | 191,200,000 | 191,180,610 | 191,200,000 | ||||||
| Diluted earnings per share | $ | 0.22 | $ | (0.05 | ) | $ | 1.29 | $ | 0.80 | $ | 1.92 |
| NON-GAAP PER SHARE MEASURES | |||||||||||
| Adjusted net income | $ | 75 | $ | 57 | $ | 173 | $ | 239 | $ | 307 | |
| Weighted average diluted share count | 191,161,431 | 191,200,000 | 191,200,000 | 191,180,610 | 191,200,000 | ||||||
| Adjusted diluted EPS | $ | 0.39 | $ | 0.30 | **** | $ | 0.91 | $ | 1.25 | $ | 1.61 |
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | ||||||||||
| --- | --- |
7
Finance of America Companies Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Financial Condition
(Dollars in thousands, except share data)
| June 30, 2021 | |||||
|---|---|---|---|---|---|
| Successor | |||||
| (unaudited) | |||||
| ASSETS | |||||
| Cash and cash equivalents | 191,736 | **** | $ | 157,336 | |
| Restricted cash | 325,226 | **** | 354,390 | ||
| Reverse mortgage loans held for investment, subject to HMBS related obligations, at fair<br>value | 10,347,459 | **** | 10,316,027 | ||
| Mortgage loans held for investment, subject to nonrecourse debt, at fair value | 5,939,651 | **** | 5,424,621 | ||
| Mortgage loans held for investment, at fair value | 1,077,670 | **** | 1,225,090 | ||
| Mortgage loans held for sale, at fair value | 2,047,015 | **** | 2,057,542 | ||
| Debt securities | 7,317 | **** | 8,694 | ||
| Mortgage servicing rights, at fair value, 96,073 and 65,129, subject to nonrecourse MSR<br>financing liability, respectively | 340,949 | **** | 290,938 | ||
| Derivative assets | 54,993 | **** | 61,811 | ||
| Fixed assets and leasehold improvements, net | 29,503 | **** | 28,669 | ||
| Goodwill | 1,298,796 | **** | 1,298,324 | ||
| Intangible assets, net | 692,676 | **** | 704,243 | ||
| Other assets, net | 315,102 | **** | 300,253 | ||
| TOTAL ASSETS | 22,668,093 | **** | $ | 22,227,938 | |
| LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST (“CRNCI”) AND<br>EQUITY | |||||
| HMBS related obligation, at fair value | 10,216,310 | **** | $ | 10,168,224 | |
| Nonrecourse debt, at fair value | 5,831,083 | **** | 5,425,732 | ||
| Other financing lines of credit | 3,325,156 | **** | 3,412,234 | ||
| Payables and other liabilities | 509,803 | **** | 488,735 | ||
| Notes payable, net | 353,567 | **** | 353,718 | ||
| TOTAL LIABILITIES | 20,235,919 | **** | 19,848,643 | ||
| EQUITY | |||||
| Class A Common Stock (Successor), 0.0001 par value; 6,000,000,000 shares authorized;<br>58,936,744 shares issued and outstanding at September 30, 2021 | 6 | **** | 6 | ||
| Class B Common Stock (Successor), 0.0001 par value; 1,000,000 shares authorized, 6 shares<br>issued and outstanding at September 30, 2021 | — | **** | — | ||
| Additional paid-in capital (Successor) | 821,316 | **** | 807,521 | ||
| Accumulated deficit (Successor) | (48,164 | ) | (69,548 | ) | |
| Accumulated other comprehensive (loss) income | (92 | ) | (27 | ) | |
| Noncontrolling interest | 1,659,108 | **** | 1,641,343 | ||
| TOTAL EQUITY | 2,432,174 | **** | 2,379,295 | ||
| TOTAL LIABILITIES AND EQUITY | 22,668,093 | **** | $ | 22,227,938 | **** |
All values are in US Dollars.
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Finance of America Companies Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Operations
(Dollars in thousands, except share data)
(Unaudited)
| Q3 2021 | Q2 2021 | Q3 2020 | YTD 2021 | YTD 2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Successor | Predecessor | Combined^(1)^ | Predecessor | ||||||||||||
| REVENUES | |||||||||||||||
| Gain on sale and other income from mortgage loans held for sale, net | $ | 210,095 | **** | $ | 187,577 | $ | 407,926 | $ | 689,006 | $ | 836,901 | ||||
| Net fair value gains on mortgage loans and related obligations | **** | 122,509 | **** | 131,151 | 95,955 | 330,323 | 221,638 | ||||||||
| Fee income | **** | 145,725 | **** | 90,864 | 119,375 | 397,960 | 266,002 | ||||||||
| Net interest expense: | |||||||||||||||
| Interest income | **** | 15,862 | **** | 13,151 | 9,937 | 41,674 | 29,615 | ||||||||
| Interest expense | **** | (37,691 | ) | (33,626 | ) | (25,935 | ) | (105,683 | ) | (93,165 | ) | ||||
| Net interest expense | **** | (21,829 | ) | (20,475 | ) | (15,998 | ) | (64,009 | ) | (63,550 | ) | ||||
| TOTAL REVENUES | **** | 456,500 | **** | 389,117 | 607,258 | 1,353,280 | 1,260,991 | ||||||||
| EXPENSES | |||||||||||||||
| Salaries, benefits and related expenses | **** | 262,000 | **** | 274,731 | 240,381 | 775,261 | 615,034 | ||||||||
| Occupancy, equipment rentals and other office related expenses | **** | 8,283 | **** | 6,720 | 8,184 | 22,600 | 22,795 | ||||||||
| General and administrative expenses | **** | 141,595 | **** | 119,301 | 113,804 | 388,113 | 273,584 | ||||||||
| TOTAL EXPENSES | **** | 411,878 | **** | 400,752 | 362,369 | 1,185,974 | 911,413 | ||||||||
| OTHER, NET | **** | 9,928 | **** | (2,103 | ) | (2,470 | ) | (1,037 | ) | (2,514 | ) | ||||
| NET INCOME BEFORE INCOME TAXES | 54,550 | (13,738 | ) | 242,419 | 166,269 | 347,064 | |||||||||
| Provision for income taxes | **** | 4,440 | **** | 1,086 | 808 | 6,663 | 1,574 | ||||||||
| NET INCOME | **** | 50,110 | **** | (14,824 | ) | 241,611 | 159,606 | 345,490 | |||||||
| CRNCI | **** | — | **** | — | (4,953 | ) | — | (22,959 | ) | ||||||
| Noncontrolling interest | **** | 28,726 | **** | (17,089 | ) | 276 | 16,098 | 1,076 | |||||||
| NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 21,384 | **** | $ | 2,265 | $ | 246,288 | $ | 143,508 | $ | 367,373 | ||||
| EARNINGS PER SHARE | |||||||||||||||
| Basic weighted average shares outstanding | **** | 59,861,171 | **** | 59,881,714 | N/A | ||||||||||
| Basic net income per share | $ | 0.36 | **** | $ | 0.04 | N/A | |||||||||
| Diluted weighted average shares outstanding | **** | 191,161,431 | **** | 191,200,000 | 191,180,610 | ||||||||||
| Diluted net income per share | $ | 0.22 | **** | $ | (0.05 | ) | $ | 0.80 | |||||||
| ^(1)^ | Financial results of combined successor and predecessor of the business combination with Replay. | ||||||||||||||
| --- | --- |
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Webcast and Conference Call
Management will host a webcast and conference call on Tuesday, November 9, 2021 at 8:00 am ET to discuss the Company’s results for the quarter ended September 30, 2021.
The conference call will be made available in the Investors section of the Company’s website at https://www.financeofamerica.com/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register.
The conference call can also be accessed by the following dial-in information:
| a. | 1-877-300-8521<br>(Domestic) |
|---|---|
| b. | 1-412-317-6026<br>(International) |
| --- | --- |
| c. | Conference ID: 10161020 |
| --- | --- |
Replay
A replay of the call will also be available on the Company’s website approximately two hours after the live call through November 23, 2021. To access the replay, dial 1-844-512-2921 (United States) or 1-412-317-6671 (international). The replay pin number is 10161020. 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 diversified, vertically integrated consumer lending platform. Product offerings include mortgages, reverse mortgages, and loans to residential real estate investors distributed across retail, third party network, and digital channels. In addition, Finance of America offers complementary lender services to enhance the customer experience, as well as capital markets and portfolio management capabilities to optimize distribution to investors. The company is headquartered in Irving, Texas. For more information, please visit https://www.financeofamerica.com.
Forward-Looking Statements
This press 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. Such forward-looking statements are subject to various risks and uncertainties including, among others; the effect of the COVID-19 pandemic on the Company’s business; changes in prevailing interest rates or U.S. monetary policies that affect interest rates that may have a detrimental
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effect on our business; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors in our markets; our ability to obtain sufficient capital to meet the financing requirements of our business; the use of estimates in measuring or determining the fair value of the majority of our assets and liabilities; the possibility of disruption in the secondary home loan market, including the mortgage-backed securities market; and other risks and uncertainties set forth in the section entitled “Risk Factors” included in our Registration Statement on Form S-1 originally filed with the SEC on May 25, 2021, 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. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the Company’s filings with the SEC.
Non-GAAP Financial Measures
The Company’s management evaluates performance of the Company through the use certain non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA and Adjusted Diluted Earnings per Share.
We define Adjusted Net Income as net income (loss) adjusted for change in fair value of loans and securities held for investment due to assumption changes, amortization and other impairments, equity based compensation, change in fair value of deferred purchase price obligations (including earnouts and TRA obligations), warrant liability, and minority investments and certain non-recurring costs.
We define Adjusted EBITDA as Adjusted Net Income (defined above) adjusted for taxes, interest on non-funding debt and depreciation.
We define Adjusted Diluted Earnings Per Share as Adjusted Net Income (defined above) divided by our weighted average diluted share count, which includes our issued and outstanding Class A Common Stock shares plus Finance of America Equity Capital LLC’s Class A LLC units owned by our noncontrolling interest on an if-converted basis.
The presentation of non-GAAP measures is used to enhance investors’ understanding of certain aspects of our financial performance. This discussion is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Management believes these key financial measures provide an additional view of our performance over the long-term and provide useful information that we use in order to maintain and grow our business.
These non-GAAP financial measures should not be considered as an alternate to (i) net income (loss) or any other performance measures determined in accordance with GAAP or (ii) operating cash flows determine in accordance with GAAP. Adjusted Net Income and Adjusted EBITDA 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 and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business or distribute to stockholders. We compensate for these limitations by relying primarily on our GAAP results and using our non-GAAP financial measures only as a supplement. Users of our interim unaudited consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures.
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Contacts:
For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com
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