Financial Data and Key Metrics - Net income for Q3 2024 was $204 million, or $8.48 in basic earnings per share, with adjusted net income of $15 million, or $0.67 in adjusted earnings per share, and adjusted EBITDA of $32 million [7] - Funded volume for Q3 reached $513 million, exceeding the guidance range of $475 million to $500 million [8] - Revenue increased from $79 million in Q2 to $290 million in Q3, driven by higher origination volumes and fair value gains on residual assets [24] - Adjusted EBITDA grew from $10 million in Q2 to $32 million in Q3, reflecting higher revenue and improved margins [25] - Tangible net worth rose to $231 million, or approximately $10 per share [23] Business Line Data and Key Metrics - The retail channel saw a 38% productivity improvement in fundings per loan officer compared to the prior quarter [13] - HomeSafe Second product saw an 89% increase in Q3 compared to Q2, with further growth anticipated [19] - The company completed a reverse stock split and finalized the exchange offer and consent solicitation of its 2025 unsecured notes, enhancing its balance sheet and financial flexibility [9] Market Data and Key Metrics - The company is focusing on consumers aged 55 and older seeking second lien mortgage loans, a segment with significant growth potential [11] - Home equity lending nationwide is on the rise, with denial rates for people aged 55 and older exceeding 35%, presenting a significant opportunity for the company [19] Company Strategy and Industry Competition - The company is modernizing its approach to customer experience and acquisition through a digital-first channel and a modern advertising strategy [15] - The consolidation of the Finance of America Reverse and AAG brands under a single name has been successful, setting the stage for further modernization [14] - The company is expanding its HomeSafe Second product to additional states and lowering loan interest rates to attract more customers [18] Management Commentary on Operating Environment and Future Outlook - The company expects to deliver adjusted earnings per share between $2.60 and $3 in 2025, reflecting confidence in its growth trajectory [31] - The senior population is expected to nearly double by 2050, presenting a massive total addressable market for the company's home equity-based retirement products [37] Other Important Information - The company completed a securitization of its HomeSafe product totaling $794 million in Q3, its third such securitization in 2024, enhancing liquidity [33] - The company is focused on improving its marketing strategy with a new advertising agency, introducing regional and local programs to build brand profile and drive business in strategic markets starting in 2025 [17] Q&A Session Summary Question: Outlook for volume given the backup in rates [39] - The company expects Q4 volume to be similar to Q3, around $500 million, with full-year 2025 volume anticipated to be around $2.7 billion [40][41] - The introduction of the HomeSafe Second program is designed to mitigate the impact of rising rates, offering a second lien product that is ideal for borrowers if rates remain high [42] Question: Timing and impact of HMBS 2.0 [44] - The company expects feedback from Ginnie Mae on HMBS 2.0 around mid-November [44] Question: Volume expectations and seasonality [46] - October was the strongest month for funding and submission volumes in 2024, but Q4 volumes are expected to be similar to Q3 due to holiday periods [47][48] - Seasonality may impact Q1 volumes, with growth expected to pick up after Q1 [49] Question: Impact of rate volatility on fair value marks [51] - Fair value marks are influenced by multiple factors, including interest rates, spreads, and home price appreciation, with some offsetting effects expected due to spread tightening [52][53]
Finance of America panies (FOA) - 2024 Q3 - Earnings Call Transcript