Financial Data and Key Metrics - Net income for Q3 2024 was 8.48 in basic earnings per share, with adjusted net income of 0.67 in adjusted earnings per share, and adjusted EBITDA of 513 million, exceeding the guidance range of 500 million [8] - Revenue increased from 290 million in Q3, driven by higher origination volumes and fair value gains on residual assets [24] - Adjusted EBITDA grew from 32 million in Q3, reflecting higher revenue and improved margins [25] - Tangible net worth rose to 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 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