Finance Of America Companies Inc. Q3 FY2025 earnings call

• Strategic Execution and Financial Performance: The third quarter marked strategic execution with strong performance. Year - to - date, GAAP net income was $131 million or $5.78 per basic share. Adjusted net income showed significant sequential improvement. - Balance Sheet Management: Completed transactions to enhance liquidity and balance sheet flexibility, including repaying $85 million of higher cost working capital facilities, entering into an agreement to repurchase Blackstone's equity stake, and closing a nearly $2 billion proprietary securitization in September. Cash increased from $46 million on June 30 to $110 million on September 30. - Partnership and Innovation: In October, announced a strategic partnership with Better.com to expand product offerings and enhance technology backbone. Continued to invest in digital innovation, AI, and data analytics to improve customer experience, marketing ROI, and operational productivity.

For the third quarter of 2025, on an adjusted basis, the company generated adjusted net income of $33 million for the quarter or $1.33 per share. For the first 9 months of 2025, adjusted net income totaled $60 million or $2.33 per share. Adjusted EBITDA for the first 9 months of 2025 was $114 million, a 171% improvement compared to the same period a year ago. Funded volumes increased by over 28% year-to-date, with $1.8 billion funded in originations in the first 9 months of 2025 compared to $1.4 billion in the same period of 2024. Third - quarter funded volume was $603 million and submission volume was $887 million. For the year 2025, funded reverse mortgages reached $1.97 billion by the end of October, surpassing 2024's $1.92 billion, and October submissions were $336 million, the highest in 3 years. Revenue contribution details: Adjusted net income and EBITDA improvements were driven by improving revenues across the business, including increased margins on HomeSafe and HECM products, stronger origination fee income, and higher capital markets revenue from securitizations.

• Reaffirming full year 2025 adjusted EPS target of $2.60 to $3 and anticipate tracking toward the low end of the previously stated volume range of $2.4 billion to $2.7 billion. - Expecting 20% to 25% year - over - year volume growth in 2026, supporting a 2026 adjusted earnings per share guidance of $4.25 to $4.75 per share, which is up from the 2025 range of $2.60 to $3.

Comments on the call may be forward - looking statements subject to risks where actual results for future periods may differ materially from those expressed or implied by these forward - looking statements. Such risks include those described in the Risk Factors section of Finance of America's amended annual report on Form 10 - K for the year ended December 31, 2024, filed with the SEC on May 20, 2025, and may be amended and updated in subsequent SEC filings.

Q: Just on the buyback, has that been completed yet? Or what is the updated time frame on that completion?

A: It has not been completed yet, Doug. It's really -- we're on track to complete it. Most likely that will begin later this month and into December perhaps.

Q: And can you remind me the cash total of that, just as we think about kind of this, the uses of your current cash position?

A: It's about $80 million.

Q: And then how do you think about what is the right level of cash to hold? Like how much of that capacity do you have to redraw do you think you need to do in the coming months?

A: So if you kind of piece it together, Doug, I think we ended the quarter with $110 million. We indicated we had paid down during the quarter $125 million of working capital facilities, right, which was $85 million of the kind of corporate general facilities and then other kind of warehouse debt. So of that $125 million, $60 million of it is available really to be redrawn as necessary.

Q: There are lots of different measures of earnings. How much cash do you generate in a typical year? In other words, how much cash would you generate in a 12 - month period on average?

A: So Leon, I'll answer that one. So in any given year, when you look at our PTI, it may -- because we create residuals in MSR, I would say within 24 to 36 months after our P&L, that number all turns green. So if we post $100 million or $120 million of PTI for this year, you would expect over the course of 3 years that, that would all become cash?

Q: So basically, how many shares is the new capitalization going to be?

A: So total what we have today about 24 million shares outstanding, right? 8 million of that will be repurchased in the Blackstone transaction, which leaves you with about 16 million. And then the convertible notes, both the $150 million we have from the prior convertible notes and the $40 million notes we just added would add about 7 million plus our stock options get you back to about 24 million. So you'll see our total fully diluted share count go from what today is about 31 million, down to about 24 million on an adjusted basis going forward.

Q: So are you suggesting that you generate about $4 a share in cash earnings?

A: Yes, at $100 million in PTI, that would be correct.