Finance of America reports Q1 loss, eyes future growth By Investing.com

Finance of America, a leading financial services company, reported a net loss in the first quarter of 2024, with a GAAP net loss of $16 million or $0.06 per basic share. Despite the loss, the company highlighted a significant improvement on an adjusted basis, reducing its net loss to $7 million or $0.03 per fully diluted share, a 65% improvement from the last quarter.

The company attributed the enhanced financial performance to increased revenue and reduced costs. In the earnings call, Finance of America discussed its strategy for growth, including a focus on its HomeSafe Second product and plans for securitization. The company also announced a rebranding initiative, consolidating its wholesale and retail branches under a unified brand name.

Key Takeaways

• Finance of America reported a GAAP net loss of $16 million, with an adjusted net loss of $7 million.
• The company saw a 65% improvement in its adjusted net loss compared to the previous quarter.
• There was a $5 million increase in revenue in the originations platform, despite a slight 3% drop in reverse volumes.
• Finance of America plans to increase origination volumes by 10% in Q2, aiming for $465 million to $500 million.
• A rebranding effort will consolidate wholesale and retail operations under the Finance of America brand in early Q3.
• The company is optimistic about the growth of its HomeSafe Second product and expects robust home price appreciation in Q2.
• Finance of America is looking to secure additional leverage on the MSR asset and address its high-yield debt.
• Updates on Q2 and Q3 performance will be provided in the next earnings call in August.

Company Outlook

• Aiming for a 10% increase in origination volumes in Q2.
• Expecting robust home price appreciation to continue in Q2.
• Anticipating breakeven or profitability by Q2 or Q3.
• Planning to consolidate brand names in early Q3.

Bearish Highlights

• The company reported a net loss both on a GAAP and adjusted basis.

Bullish Highlights

• Improved margins led to increased revenue in the originations platform.
• HomeSafe Second product is seeing growing interest from mortgage bankers and servicers.

Misses

• Reverse volumes decreased by 3% compared to the previous quarter.

Q&A Highlights

• The company is exploring additional leverage options for the MSR asset.
• There are plans to address the high-yield debt situation.
• Finance of America will update stakeholders on Q2 and Q3 during the August…