Earnings call transcript Q4 2022

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Operator

Hello and welcome to the Finance of America Fourth Quarter 2022 Earnings Call. My name is John and I’ll be coordinating your call today. [Operator Instructions]

I’ll now hand you over to Michael Fant, Senior Vice President, Finance to begin. Michael, please go ahead.

Michael Fant

afternoon, good and you everyone. Thank of Welcome year quarter full fourth earnings to call. Finance XXXX and America’s With are Officer. Officer and me Chief Johan Interim today Gericke, Graham Fleming, Chief Financial and President Executive

recorded As this earnings and www.financeofamerica.com. on a presentation at can Investor website call being release Relations reminder, our find and is the you

to will In financial on addition, refer we this metrics non-GAAP certain call.

and GAAP discussed You can earnings presentation unreasonable the effort on extent page website. call to the of press find reconciliations on release financial of Relations Investor available metrics non-GAAP our today’s to in our without

would Also, XXXX results Private of may on the described originally other statements factors, ended statements that are for Risk are number or of Securities for section due may of risks to December annual to today’s the within I are you’ll conference XX, expected forward-looking earnings expectations forward-looking and Act of Reform future Safe current to these the from release. differ those including or by find regarding periods Actual a implied like the report SEC XX-K based comments on forward-looking expressed operating Form performance the in remind materially XX, everyone be These the Factor Litigation America’s and financial this statements subject XXXX, on the filed Company’s on Company’s with Finance March that in the of year meaning statement for those Harbor XXXX. for future that statements call periods.

may with periodic factors and subsequent filings As in SEC. be updated amended such our the risk

are conditions and statements unaudited. change. commitment any undertaking interim We are not these update are if Please financials these period note to

Interim Graham call to President like Finance Executive turn Fleming. Officer, would Chief to America’s over I Now, the of Graham? and

Graham Fleming

going us will completion year. the financial we business Thank our quarter of the our then briefly start remaining fourth full transformation time Good and earnings everyone following joining our year. for full on focused last I afternoon, substantial quarter our the results and and you for year call. to on you XXXX by started We're thank Michael. discussing spend structure

the as an million loss or when During recognized $XX mortgage the losses is the to associated loss share. down of services, quarter, $X.XX well of adjusted we On for services, declining originations, our million out net and with full in per and the diluted year. loss adjusted net million the year $XXX an $XX on fourth volumes basis, quarter attributable we the originations losses year. business, $XX recorded strip fourth adjusted mortgage commercial and fully the for in recognized basis, income operating for The forma pro wind in of entirely lender lender commercial originations as a and net net adjusted million FOA we

context the When have focus streamlining mortgage about we and broader we residential these competitive our where think we prudent to in market, of the investing on results core believe businesses in advantages. significant organization it

you As months transformation. part taken the the over we've want to past of six walk such, I as through our steps

This our wholesale operations discontinued reported is discontinue segment in mortgage to decision and forward across beginning our announced we XXXX, XXXX. both be as wind and October, complete, retail channels. will segment In origination this now down

sell an the center business entered February, In we into to for in million. agreement $XXX title up insurance

opportunities consistent our service have to with potential. focus decision complimentary we long-term growth a the greatest business, is forward where origination synergies on As to this and our sale

Upon the We to second close this regulatory are quarter. the transaction approval capital during the expect balance through and influx of expect contribute we now will completion, to working positively sheet.

of we subsidiary of deal that Commercial, loans. real closing is of to and the in certain remaining assets our of out sale America, in Finance the the The close announced expected process the business. estate March, we ago, weeks residential, three pipeline offers Finally, of investment are

made We mortgage residential account the to for in market. uncertainty these decisions

businesses high centered Benefiting this on from achieve prioritizing their in helping from Americans tailwinds, strong like fully Reverse. investments demographic strategic us retirement not did our stop new goals. is However, direction growth and economic

older reality. in providing to their day-to-day the home customers, Americans firmly homes, we We up people's in resources to goals many suite their tied they With make like innovative of achieve financial believe assets can more our help living their goals. often that can retirement equity solutions a retirement. fund By Americans an

largest it we the heck liabilities a the To largest proprietary Reverse acquire announced December, to within focus. is making the we strategic assets while certain originator originator, combined originator, will that our mortgage make company and of our intention AAG AAG, in industry. fit upon closing end, in and largest are reverse lender company early which the our the

AAG plans. home retirement also presence out equity umbrella the recently mapping under XX. received anticipate FOA direct annually. while levering Americans consumer March regulatory has we broad our reaches million their that than to The ability XX approval on market more educate and a this Bringing about more consumers deal expand closing will

accretive book to more forward acquisition value upon completion. details be earnings, and tangible providing the immediately to to expect both look and We we

their and our simplifying efficiency, be the using their achieve for well two, choice home Americans set for one; structure its focusing to positioned equity. By will long-term business inherent and preeminent up we on goals be retirement looking growth to

innovative With to look business. will position our the our our industry, bolster our in serve leader we reverse and beyond clients better solutions products the able in offer apart that truly set us product, to continue a reverse as enabling solidify be traditional non-agency structure, to our to new market, at us we

second home $XX.X of homes. reverse we third trillion to products allows are help equity reaching XX to second, lien seniors older their making value product relaunch quarter, a the equity, With well-positioned that of homeowners access the only announced and our payments. in record the the home HomeSafe mortgage utilize February, In monthly without their senior increased

wholesale XXXX, our reverse a income. our originated $X.X the as business and million segments, to in billion business $XXX produced origination business continues the In in bar our high to funded volume in platform. Turning reverse set premier pre-tax industry

will direct-to-consumer under with AAG find them. the to be to the understand solution we brand, directly we move their the better can connect we space right into how our customers for As and needs able

play growing role products markets management FOA's company's development FOA's in capital portfolio large originated proprietary of a operations, connecting the capabilities innovative a and crucial and investors. enabling institutional loans the to of number

billion has allowed reverse balance our During the This successfully proprietary sheet. us securitizations over de-lever in team during last for a our volume $X.X challenging four has market. four significantly completed to months,

optimize proactive of streamline our our the level, The business align rightsizing corporate the to $XX a to taken and improve to annually operate we and steps overall will basis, saving model. allow to at with more between performance. efficiently, us compared when Finally, we've On business peak million new anticipate during infrastructure $XXX operations million our and rate XXXX. costs reduce costs, run

a strategic growth we was we and our and direction. transactions year are company. XXXX to for efforts success. and are short, positioning non-core long-term achieve our ourselves In transformative ongoing an By operations our reverse future as goals focus our divesting our transformation important the in support for on These business, adding to step

confident the are and excited With made, we extensive evolution we see bring of the are continued we XXXX business. more that to have changes will our opportunity

that, the discuss with financials. to will And I to pass call Johan the

Johan Gericke

our quarter dive specifics a you, provide I brief financial the of on Graham. full the results before I into overview Thank and will here.

Mortgage services the our Turning wind net for operating and quarter of overall year, Origination declining and in losses entirely the company the driven and segments. loss recognized the operating lender which adjusted and volumes to results, down the commercial an was the by segment

we impact If of those year. eliminate the net generated for $XX businesses, the adjusted of company million income the would've

available the our four Investor results Relations You website. on presentation can of see on earnings buildup the these Slide of

and committed tangible From to due a cash million December to in environment. segment. the preserving Book to net $XX as this We in volatile $XX mortgage $XXX QX worth losses which was of balance million. liquidity solely sheet value remain XX, stands perspective, of our origination at million operational decreased

acquisition worth balance and divestitures AAG balance Throughout have steps liquidity of of will and the the deliver add net and the businesses and sheet. our and quarter we fourth tangible to the sheet. year-to-date, commercial strengthen The to significant taken title

securitize markets loans health last loans the allowed a $X.X market. capital very been and inventory This has challenging able investment months, billion of reverse amidst has liabilities. approximately proprietary funding our the in to During for six reduce us team related materially to

first and quarter as We of XXXX, be expect the year. modest in the losses in the going mortgage business essentially this forward, will in wind-down we completed QX losses eliminated

the majority end in we quarter. the have first mentioned, working to sell sold the business Since of end loans remaining Graham remaining and assets. other have the sold of assets of As to and over the and committed trades XXXX, sell we loans commercial million the actively loans are the by $XXX of operating the

the the of a company strengthens in acquisition Finally, AAG of number ways.

equity $XX of roughly potentially from business raise our the a strengthen shareholders tangible at will it $XX First, issuance includes majority the and in acquire Also, the a in million capital equity liquidity. roughly, result acquisition to new below million book. to

benefits substantial anticipate have should improve results in product in of America's taken revenue XXXX. operating steps expanded sheet set, and sales Finance Overall, to will and and synergies we overlapping which force actions balance the operational of elimination cost lastly, And result functions process we an strengthen from and FOA. the the and through

a recorded and million segment, in be as to net as $XX in mentioned these operations discontinued loss. earlier, Turning with during recorded QX, adjusted home reporting GAAP. results, mortgage originations our Beginning XXXX, improvement, will excluding individual accordance

recorded $XX lender excluding services impairment and of segment Beginning discontinued For GAAP. of of the with a commercial any QX, loss, intangibles our year, in be operations other segments other pre-tax while accordance of pre-tax both recorded million, $XX will in million. excluding and any intangibles impairment a assets assets recognized as loss,

the materially segments expect of to financial the these be QX. resolved We end impact of by

to billion funded and $X.X of originated Our segment a decrease rising volumes of despite material generated revenue in $XXX due income and spreads. Reverse pre-tax million XXXX margins rates in

negatively a streamline in adjusted our the value lead In the million year, the income balance expand and sheet that de-risk performance steps wound of marks company and will business, down non-cash to our at the taken we Management the impacted segment, Reverse recognized fair organization improved the anticipate pro-forma basis, net on performer our assets. looking XXXX. was divested to on our income pre-tax have excluding $XX by we Finally, for businesses, and Portfolio year conclusion, for

let now that, Graham to closing back hand me for remarks. With it

Graham Fleming

Johann. you, Thank

clear its it As improve we reflect that on taken substantial steps has the is to trajectory. company XXXX,

Our operations. additional current look completing into platform focus We integrating updates our the AAG direct-to-consumer call. transactions forward on announced the our on next quarterly is successfully to and providing

business recent on some expect there term remain our navigate do we organization; bullish transformation. as ahead earnings we be XXXX, Looking near to will of in however, the the the we power volatility performance

half out While first actions our in performance second half the will of these will impact our smooth we results, year. anticipate the

the During business nimble of a we meet needs evolving will Finance focus stronger dynamic we to have completing both remain America. laid a with and out build for of on this steps today foundation time, to the the

our business, solutions looks company model a the and stakeholders. equity both for new And for with open home the up operator retirement-focused future it our With will as questions. bright that

Operator

Raymond Stephen instructions] with [Operator Laws Our from first question is James.

is line open. Your now

Stephen Laws

amount. afternoon. Graham, what a down with I Reverse of decent business start good there. and Volumes want seeing for you're Hi, the QX, kind to sequentially

I can mentioned QX. remarks, about we're but what the talk prepared -- with almost you done rates think in reference you

AAG do what you seen volumes you how and can deal? you've talk So the for about expect closing Reverse year-to-date,

Kind will the long mentioned impact you impact achieve synergies will with expense take And two there that on from AAG to the follow as those those work as How it put for up operational I volumes of then that. you guess margin, platform? some cost in. QX? together platforms synergies how that Johan, you

Johan Gericke

in Thank we volumes Yes, we have is Hope -- seen you, down all space. the Reverse have well. Steven. seen so come

around I been bankruptcy we execution. the had had balance sheet, focused we some on to have mentioned, in As securitization right? a uncertainty remind, December, We, delivering We right?

and QX the and de-levering So balance were in QX assets sheet those into securitizations. primarily moving focused we on

a mentioned, is coupon amortizing a I lean first, loan We be senior to which retain slower accreting which allows have as a will low the the and current product, second introduced, balance. second payment, an

we think is term, So, enhances it credit right? long in quality of product, option actually, this the the that the

the February, educate looking particular introduced product. recently correspondence in our just we're we've on brokers this and our But to and benefits of that

improve the spreads, on yes, new We've have So more volume the balance rate focused seen down. those we a more come normal originations. interest to think as than return here we'll to able sheet prices. been level, stabilizes market be We and

been originating not to they proprietary couple When AAG, our last quarters. product it of comes have for the

expect current that expect post product do at to acquisition. do levels be the we from to like million something expect So some $XXX AAG add to space, in of We a proprietary and volume our that that volume acquisition.

Stephen Laws

troughed, I adjusted $X net Great. -- Kind with expect it million things how in moving has And couple discontinued look will A&I basis you I'll Do QX, as for year a that through pro-forma you the talk know move of to can I expect QX? follow think up, kind to ops, we troughed of do see profitable segments forward? we income a to a on pro-forma about, at of that build you as was on basis minus a starting QX. there

Johan Gericke

there. Hi it's Steven, Yes, Johan.

the also asked on just earlier synergy. You

been to the transition transition, We've planning close So, be will as -- full of closed. the flight obviously as quarter. once we in we've I a deal mentioned, the but AAG the end at we expect

I the the And course of QX, of and start to expense over revenue expect QX. both would course materializing synergies the the so over

being is transaction, QX that the QX be So AAG start synergies the earnings. probably obviously trough up start that'll said, sure, driving for as pick and year in we this volume realizing the the for to from going

to And and then fully and year, QX the be side, reverse the obviously should QX so better, business integrated synergies. in we'll earnings and the and the for achieving profile and QX think you of of kind working from have QX trough

Stephen Laws

you of look moved final process down have that don't businesses what might. or anything Great. or monetize left as at business is When left, one, a I this Thanks. there point? wind view you one look that you to core. Graham, at you you And lines you maybe that if think other of, couple feel like do need largely to kind you've completed you've

Graham Fleming

the point. but majority think completed this nothing the else divestitures, there's imminent, Nothing Steven. we've We imminent of

Stephen Laws

you. Great. Thank

Operator

team are pass questions, call closing for more no I'll management There remarks. so back over the to the

Michael Fant

our call, look forward you, updating to in for Thank call you next May. joining everybody our on and we earnings

Finance Of America Companies (FOA) 13 Mar 232022 Q4 Earnings call transcript