Finance Of America Companies (FOA) 8 May 232023 Q1 Earnings call transcript

Good afternoon. Thank you for attending today’s Finance Of America First Quarter 2023 Earnings Call. My name is Frances, and I will be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answer at the end. [Operator Instructions]

to with conference Finance like host, to now Fant Michael Of would pass over the our I America.

are call. Thank Welcome you, Chief me Financial earnings Johan to everyone. Chief today With Finance of Officer. Officer; and America’s first Gericke, good and Graham Fleming, afternoon, Executive quarter

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

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

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

meaning These will of future that the subject company’s I based performance you on that statement forward-looking periods. call the this of financial like XXXX Harbor release. expected earnings are Securities Safe operating statements conference and the and current be the to company’s Reform find Litigation today’s are in regarding statements expectations forward-looking for remind Also, Private on would the Act everyone comments may within to statements for

the Actual described by year forward-looking including section due December may from a differ results on the ended America’s Form other to XX, SEC or of with of in March are XX, annual these the number of XXXX. risks Risk those for statements Finance or expressed that for factors, future XXXX, on XX-K those periods implied materially Factor filed report

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

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

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

join first forward. to older that joining new thank I more Of call Good Finance strongly solutions afternoon, choices CEO. platform truly gives believe the am quarter to today retirement ways differentiated Michael. honored consider excited their to I on our you, And retirement you Finance as provides America’s earnings call. modern and and I Of that XXXX Thank that Americans for everyone. am a vision America fund and us and drive

call the will a focused go-forward strategic will time for of on discussion I spend into business then then the dive results begin priorities. I For quarter. remaining structure offer today’s our brief will our our Johan a deeper with financials. and financial

organization the milestones competitive advantages due achieved We underpin businesses first past to substantial This in that core has as equity capitalize platform the in and centerpiece. home modern over trends largely our believe the Current several opportunity point demographic our the with and on was quarter. year to a to FOA to significant efforts invest streamline retirement we this. needed market

operations share driven basis, or by valuations we adjusted of increases QX, share. per recognized basis, a we diluted in our across GAAP $XX favorable recorded per in continuing loss a million net million or On basic fully of base. $XX $X.XX $X.XX income asset primarily an net On

the diluted year, continuing be integration $X.XX structure. as of per between $X.XX, for the our complete to and operations expect corporate and adjusted we we For our AAG optimize earnings share

and touch will and structure recently today moving reporting we America new Finance We believe structure. our of in on Johan As a align the to a updated with our offers segment operating simpler forward. of accurate moment, new breakdown more

year. in businesses a management was our Both as basis we retirement volume for This on reduction quarter delivered substantial of an QX. adjusted the the portfolio first encouraging solutions results profitable and expected in

expenses. a was on segments reduction operations our in an lower as adjusted profitability in offset Overall, down continuing corporate fully wasn’t profitability operating in basis, by quarter-over-quarter our

the see the to salaries expect and reductions right-size first third our quarter this to and footprint expect XXXX. XXXX, current complete benefits, on efforts better We our align by to have corporate Since we in seen materially our a reduction further to XX% remain of the corporate work in quarters. and focused structure quarter we with of coming

Finally, sheet, the of series in closed including as concurrent commitment recently improvement acquisition, value our at well the tangible equity as real our operations continuing validation million for to strengthen from from line a shareholders, AAG to deliver are actions, quarter, book end of our year $XX a that our results. $XXX raised million balance this with to efforts million $XXX increased last existing the beginning over further significant and

to Further This the improvement QX, of share efforts, expected in majority to of services close signed in to a is title QX. subject customary into our also and the close early operating is and Essent approvals to regulatory businesses. QX, transaction sheet business insurance The lender in conditions. sell track remainder balance our we previously an announced to sale agreement closing of on

those closed, scale retirement Once into full the Finance completed transformation America both will have of platform. a modern transactions have we of solutions of

solutions innovative place to help in life. of suite retire thrive in as age and later and structure designed new are Our

Looking and company This growth the AAG accelerate retirement the beyond, of solutions growth and acquisition a our marks as the new the strategic of of awareness our offerings prospects position enhance America’s that leader expand we a acquisition of Finance market. field. in plan materially to expect chapter assets the in will in

educational brand America and ability our increased through initiatives outreach and and our Reverse. the and awareness customer by means the optimistic presence market in and awareness; as terms of; one, as a base a our what result of strategic share reach Finance the of this two, direct-to-consumer three, originator grow increased among volume; quite combination now are consumers, we combination of reverse of greater partnerships We business to brand largest are via about via new in mortgages AAG

will XX of channel AAG’s targeted expanded The more and complement retail marketing alone advertising. the at retail and presence via proprietary AAG product reach consumers Importantly, Finance reaches Reverse. annually than innovative million brand’s direct-to-consumer suite America

for enormous solutions platform number resource of customers. a for an need This become for remarkable opportunity is combination there retirement a ours. believe creates a of We modern to America like strongly a growing finance lifelong

the in home is than in helping equity the age trillion, have is market use retirement This superpower opportunity, Improvement GAAP home by In U.S., or Finance approaching their via or financial trillion Home home equity securing homes older amassed homeowners older tapping $XX.X of value. AAG American and Silvernest. to goals, yet savings additional the income a their generating $X FAR, XX homeowners Loan more the with achieve whether sharing by

the enable of the finance and America needs company better growing Together, across overall to the retirees serve nation. AAG FAR will of

We are the of platform. Finance by retirement of solutions potential excited long-term modern and our America

the are confident investments in to we growth our made changes and have America will and result position strategy the transformative Given we for continued Finance success. of future,

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

Graham, and you, everyone. Thank good afternoon,

our financial in we Graham quarter. As the first changes significant have mentioned, reporting to made

of successful we lender discontinued mortgage operations, each wind have of designated the services the commercial operations. business down along lines recently insurance with and of as businesses, Following announced our divestitures title these our

or basic by reverse For market our primarily continuing of that the rate the the driven quarter, increased value changes operations $X.XX income assets. million per our reported share, net $XX of

segments expenses. or of by adjusted changes share company earnings loss diluted Excluding reported these an net value and offset non-recurring our items, corporate per as were $X.XX fully operating million in other $XX the than more fair

the billion acquisition sheet equity $X.X company. and assets for perspective, the $XX a Most in to significantly, AAG the of From billion March held on million occurred to we subject in assets XXst, in HMBS $X.X added investment of obligations. balance loans adding

$XX and tangible improvement significant million equity. raised shareholders the the in for capital existing led Additionally, from quarter results profitable to a

in $XXX tangible reported As million XXst, XXst. December XX% from equity, the of company March increase of an

Additionally, we have sheet. worked balance our diligently to delever

the year, last credit. other had of financing XX company billion in September of lines As of $X.X

As XX% $X.X billion. of number decreased had March to that XX, by

from for billion a loans to for reduction $X.X Over billion XX%. investment declined the loans same $X.X sale, frame, time of held and held or

strategy align Solutions, As we segments we go-forward organization, Retirement operating segments; ago. our out three that Portfolio Corporate results to present our moment quarter, closely a Management more updated and Beginning and also Graham through this we laid Other. our will our reporting with streamline business have

and perform origination and their Retirement Finance reverse Our activity mortgage retirement, America’s older lending. and including the all achieve includes for homeowners improvement Solutions help segment financial company to goal home goals of

$XXX and to improved X.X% $X due in this funded fourth for softened recognized we million the million, from in segment down volumes prior seasonality segment as quarter, quarter, pressures. from the income decline, net with quarter the the the adjusted Even to competitive for For as X.X% the margins revenue quarter.

beginning Please P&L, in from in note that acquired AAG second Retirement be the the quarter. included operations in are the for included results Solutions but yet not will our

We expect synergies expense over realize profitable acquisition coming the growth, both we revenue as the and quarters. to drive

Our segment the to reporting any Management did due not realignment. see changes Portfolio

an On in rate market million income increased For reverse pretax to million QX. the assets. $XX our recognized as adjusted basis, Management quarter, of in $X values Portfolio recognized led the segment of adjustments income adjusted net

Combined, $X these adjusted million in earned quarter. two segments the income net for

company net earlier, a represents mentioned reported the delta adjusted infrastructure. million. $XX cost Corporate our the of As current unallocated The loss total of

work overhead our with of As Corporate and organization. to further align size streamline complete the we we our will reduce organization remaining transactions, to simplicity and the

As reiterate, reduced quarter Since we reduction the in expenses. have of we to Graham seen first will XXXX, XX% to Corporate and mentioned, we continue Corporate and this. by and have I benefits salaries want optimize already significant a

hard moving Finance for position conclusion, worked has of itself success to In America forward.

to plan to step every strengthen profitability, make continue have liquidity improve derisk balance take So right we far, to our to executed sheet. the on decisions we out and and set

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

profitable pleased value Johan. businesses continuing further operations was our business corporate with you, infrastructure. to rightsizing our and year. focusing of on the Overall, to our hope our we we core The deliver Thank and by are start

and strength through the and we our we in we forward, power we will confident these efforts Solutions of are earnings organization. continued Portfolio Retirement Management, as in believe long-term drive work Moving

open With questions. it for that, we Operator, will up

of Thank comes ahead. Raymond Please Instructions] with you. Stephen go question first the Laws line [Operator from James. Our

you to Looks banks guys a And quarter, banking much I from of there of or seeing any and picture about your what a improvement asked that, Hi. afternoon. much opportunity, kind thoughts, think that? yet is first, -- another talk how or in maybe, came do bigger home your love products how How products, like maybe the coming me if of higher turmoil you Graham, system. your are little see wanted solid of the to always kind credit to level, loan the about from think way, the a banks do impacts contracting you turn direct the do of are ahead in that’s in anybody elsewhere in market? you really get compete can Good with maybe some availability you you for

Yeah.

the Stephen, question. So, for thanks

we Although, at banks a if the haven’t lenders? we base. space product number would look right, has through space would of reverse side, into years, with the thrilled seen increase the let’s the right? be our for necessarily been visibility On bank that it right, customer So that of two lines, in non-bank the

right? have potentially Goldman But and their around on home have portfolio read business. that right seen improvement, or them we the and and selling We Marcus exiting

opportunity. do see we that So as an

and the haven’t on focused -- curve. LOs we marketing integration the the been of and seen up We getting have AAG those licensed getting

So to we have focused the guys were been where AAG back getting they on pre-acquisition.

the indications of Haven’t on seen yet earlier any credit. tightening

some We indicates of but But widening of it’s in deals, some haven’t right? we seen some credit tightening QX, going term, have spreads as be but way this widening, seen much to here we that work have in point. we at the seen longer nothing through

a comments follow-up origination those and outlook of kind appreciate to volume. lead I on Yeah. for

how in margins more in really you seems you maybe competition, like seeing I talk margins a improved but are about and think bit and hold maybe little you prepared maybe can seasonality April up and quarter-to-date? it said volumes sequentially your remarks,

Yeah. you. Yeah. Stephen, thank

to closer the probably, we stand get So as I QX, to once integration we volumes look back right? expect the pick at to obviously, And we QX, on speed. AAG acquisition, the in AAG where up so, of up fully today,

do typical the there some first licensing. acquisition, a Just an some had in things so when weeks from few you to practical integrate through were asset perspective, April, go we

the perfectly. into integrated We that’s and getting are just fully working platform everybody

operating all, have the second be benefit of the power origination AAG. as of had if obviously, once smoothly acquisition. full to So roll into of to But it we and I part QX, we expect the prior the won’t that

so starting on dislocation, April, a As our back little the the widened in banking spreads bit here Graham of probably to speak. said,

to be so may say margins QX, softer we up, honest. but to in little it’s end it’s a hard So bit be early, where

Fair comments Thank enough. No. the I Yeah. this appreciate afternoon. you.

for you Thank questions. your

Yeah.

comes ahead. question Please next from with The Omega Leon Cooperman Advisors. go

retirement XX structure. are restructure company the been transition months, as company changes at voice? no a XX to in looking Yeah. you do earnings Thank a your What you. months from number There normalized as of the have today, you modern you think

from XX QX, decent something volume, I still think than right? And acquisition, funded we be, right? better a to then the today? okay, that somewhere believe months, look where But that range AAG at dependent. we X% saw the bottomline that, it’s months I is if XX obviously, going to It’s volume with we for and get can say we say, business what and of right, in you X%

And then once Management as twice should the acquisition, today. Portfolio look that what AAG segment, we run it the number relatively is you maybe and layer should at in as which be stable high

what it expect was then Corporate further And what we some said expenses the we do at our come in to peak. down of QX, to half it we rationalization

of two-thirds I’d the there, about are we way say. So

that in, the should profitability give all So when kind good you of it where is. you layer of a of indication

excess in that $X.XX of share? Is a

I No. mean…

right At could volume the Yeah. yeah. be,

you. Thank Okay.

this Thank further your question. no are you waiting. there for questions At time,

So the to pass I any remarks. additional conference will back Graham for over

to and provide look we an Yeah. joining forward Frances. update to the in Thank thank I you, for August earnings next progress. the on call. everybody call our appreciate to I questions our want

So thank for joining. you everybody

of Finance Thank the participation. earnings quarter concludes you That your America XXXX first call. for

now disconnect your may You lines.