Finance of America panies (FOA) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $172 million or $0.74 per basic share in Q3 2023, primarily due to the negative impact of rates and spreads [6] - On an adjusted basis, the net loss was $25 million or $0.11 per fully diluted share, reflecting additional losses from the Home Improvement platform and downward pressure on margins [6][31] - The company achieved approximately $80 million in annualized savings, with a 17% reduction in corporate expenses compared to Q2 2023 [14] Business Line Data and Key Metrics Changes - The reverse business originated $470 million in loan volumes, an 18% increase from $397 million in Q2 2023, attributed to the successful integration of the AAG retail platform [31] - The company maintained over 37% share of the HECM reverse market, although revenue remained relatively flat due to reduced margins, which fell from 9.2% to 7.8% quarter-over-quarter [13] Market Data and Key Metrics Changes - Homeowners in the target demographic hold over $12 trillion in home equity, indicating a significant market opportunity for the company's products [11] - The company is focused on expanding its product suite and optimizing marketing opportunities to enhance lead conversion [7] Company Strategy and Development Direction - The company is concentrating on enhancing revenue by expanding its product suite, modernizing customer experience, and optimizing marketing [7] - Strategic actions taken during the quarter include the sale of the Title insurance business and the operational assets of the Home Improvement platform to refine focus on retirement solutions [24] - The final technology consolidation is projected to start in December 2023 and be largely completed by the end of Q1 2024, which is expected to improve operational efficiencies [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro headwinds but remains focused on long-term success and executing the strategic plan [15] - The company expects near-term volume expectations to be similar or slightly above Q3 levels, despite potential seasonality effects [47] Other Important Information - The company is integrating AAG's retail platform and believes there is substantial opportunity to offer proprietary products through this channel [27] - The company is on track to identify additional savings in Q4 2023 and beyond [14] Q&A Session Summary Question: Near-term volume expectations - Management indicated that technology consolidation may cause temporary hiccups in near-term volume but expects volumes in Q4 and Q1 to be similar or slightly above Q3 levels [47] Question: Fair value marks and portfolio management - Management discussed the impact of fair value adjustments on GAAP earnings and expressed hope for a reduction in volatility in the income statement going forward [48]