Finance of America (FOA) Earnings Transcript

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DATE

Tuesday, March 10, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Graham A. Fleming
• President — Kristen N. Sieffert
• Chief Financial Officer — Matthew A. Engel

TAKEAWAYS

• GAAP Net Income -- $110 million or $5.04 per share for the full year, reflecting a 175% increase.
• Adjusted Net Income -- $74 million or $3.04 per share for the full year, up $60 million, and a 429% increase.
• Adjusted EBITDA -- $143 million for the full year, representing a 138% increase.
• Total Revenue -- $497 million, up 26% from $394 million, supported by higher funded originations.
• Originations Funded -- $2.4 billion for the year, a 24% increase from $1.9 billion; Q4 volume was $619 million.
• Fourth Quarter GAAP Net Loss -- $21 million, or $1.30 per share, driven by fair value movements.
• Fourth Quarter Adjusted Net Income -- $14 million, or $0.69 per share, representing a 180% increase.
• Fourth Quarter Adjusted EBITDA -- $28 million, up 56% year over year.
• Cash and Cash Equivalents -- Ended the year up $42 million.
• Cash Flow from Core Activities -- Generated over $150 million, used to pay down $117 million of debt, $40 million of interest, and purchase part of Blackstone's equity position (combined use totals exceed $150 million due to additional external capital raised).
• External Capital Raised -- $40 million in a 0% coupon convertible note, and $50 million in preferred equity.
• Blackstone Exit Completed -- All Blackstone equity purchased by February 2026, eliminating legacy ownership.
• PHH Acquisition Announced -- Signed agreement in November to acquire PHH Mortgage's reverse mortgage servicing portfolio; expected closing in Q2 2026.
• 2026 Guidance -- Anticipates 15%-25% volume growth, $2.8-$3.1 billion of originations, and adjusted EPS of $4.25-$4.75.
• Operational Investments -- Significant tech upgrades and introduction of 'Joy,' an AI customer ambassador delivering over five times prior conversion rates, and>60% improvement in speed to answer.
• Digital Performance Metrics -- January inquiry volume was up more than 75%, prequalification engagement doubled, submission rate improved 77%, and cost per opportunity fell 12%.
• Market Demand Signals -- Google Trends data indicated reverse mortgage-related searches rose roughly 40% at seasonal peaks.
• Warehouse Financing Conditions -- CFO Matthew A. Engel said, "warehouse financing is ample," with increased facilities and new partners, and CEO Graham A. Fleming noted improved terms.
• Debt Paydown Plan -- Targeting full $150 million senior secured notes repayment by November 2026; only $40 million of convertible notes and $150 million of exchangeable bonds remain afterward, both convertible to equity.
• Tangible Equity Growth -- Alliance America’s tangible equity position increased 117% over the prior year.

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RISKS

• Fourth quarter GAAP net loss of $21 million, described as "driven by fair value movements," with management noting exposure to interest rates and credit spread volatility.
• Timing and allocation of capital remain uncertain, as CFO Matthew A. Engel stated, "we do not have any announced share repurchase activities beyond the Blackstone repurchase," and future share repurchases depend on successful debt extinguishment.

SUMMARY

Finance Of America Companies (NYSE:FOA) reported a full-year 2025 GAAP net income of $110 million and adjusted net income of $74 million—each representing triple-digit percentage growth—driven by a 24% increase in funded originations and strict operating discipline. Management expects originations volume growth of 15%-25%, and adjusted EPS between $4.25 and $4.75 in 2026, supported by persistent gains in productivity from prior technology investments, including the scaling of its AI-powered "Joy" platform and improved funnel metrics. The PHH Mortgage servicing portfolio acquisition is scheduled to close in the second quarter, further expanding the company's capacity, while cash generated in 2025 enabled material debt reduction and the full exit of Blackstone's equity.

• President Kristen N. Sieffert highlighted a permanent shift in acquisition cost dynamics and conversion efficiency due to AI deployment, measurable through significantly improved digital and inquiry metrics.
• Management maintains "ample" warehouse financing, with improved advance rates and lower spreads noted as a competitive advantage in the current environment.
• Debt reduction remains the principal capital priority for 2026; management signaled future share repurchases may resume in 2027 post-deleveraging.
• CFO Matthew A. Engel confirmed, "cash flows from our core origination and asset-level capital markets financing activities will be sufficient to fund both the acquisition of PHH as well as the pay down of the $150,000,000 of senior secured notes."
• Google Trends and internal metrics support an expanding market opportunity for reverse mortgages, which may underpin continued volume and margin gains.

INDUSTRY GLOSSARY

• HMBS: Home Equity Conversion Mortgage-Backed Securities, a class of securitized assets backed by reverse mortgage loans.
• MSR: Mortgage Servicing Rights, contractual rights to service a mortgage loan and receive associated fees.

Full Conference Call Transcript

Michael Fant: Thank you, and good afternoon, everyone, and welcome to Finance Of America Companies Inc.'s fourth quarter and full year 2025 earnings call. With me today are Graham A. Fleming, Chief Executive Officer; Kristen N. Sieffert, President; and Matthew A. Engel, Chief Financial Officer. As a reminder, this call is being recorded, and you can find the earnings release and related presentation on our Investor Relations website at ir.financeofamericacompanies.com. I would also like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods.

These statements are based on the company's current expectations and are subject to the safe harbor statement for forward-looking statements that you will find in today's earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors in Finance Of America Companies Inc.'s amended annual report, including those that are described in the Risk Factors section on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 20, 2025. Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change.

Please note, today we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures, to the extent available without unreasonable efforts, in our earnings press release on the Investor Relations page of our website. I will now turn the call over to our Chief Executive Officer, Graham A. Fleming.

Graham A. Fleming: Thank you, Michael, and good afternoon, everyone. As we look back at 2025, it was a year of continued strong execution for Finance Of America Companies Inc. as we delivered improving operating performance and took deliberate steps to strengthen the balance sheet and improve alignment, all while operating in a dynamic market environment. For the full year, we reported GAAP net income of $110,000,000, or $5.04 per share, representing a 175% improvement compared to the prior year. On an adjusted basis, which we believe is representative of recurring earnings power, we generated full year adjusted net income of $74,000,000, or $3.04 per share, up $60,000,000 from 2024, representing a 429% increase and above our stated guidance range.

Lastly, the company recognized adjusted EBITDA of $143,000,000, a 138% increase versus 2024. These results reflect the progress we have made improving earnings quality and capitalizing on operating leverage as the platform scales. Because the securitization activity can shift between quarters, we continue to view the 2025 average earnings as the best indicator of recent normalized run-rate earnings power. For the second half of the year, the company recognized $47,000,000 in adjusted net income, or $2.50 in adjusted EPS, an annualized run-rate of $4.10 per share. From a production standpoint, we funded $2.4 billion of originations in 2025, representing a 24% increase from $1.9 billion in 2024.

Fourth quarter volume totaled $619,000,000, and importantly, this growth was achieved alongside structural enhancements to our technology and operational processes, which should allow us to continue to see positive momentum in 2026. During the fourth quarter, we continued our momentum with additional capital actions designed to strengthen the business, solidify the balance sheet, and support durable growth. In November, we announced an agreement to acquire the reverse mortgage servicing portfolio and related assets from PHH Mortgage, a subsidiary of Onity Group.

This transaction, which we expect to close in the second quarter, will expand our servicing platform, add experienced origination talent, and pave the way for a long-term relationship with Onity that accelerates our mission to make responsible home equity access available to more homeowners age 55 and older. Also in December, we announced a $50,000,000 equity investment supporting our continued growth initiatives. Stepping back, we believe home equity is increasingly becoming an important component of broader family financial planning. For many seniors, it represents not only retirement security, but also flexibility to support evolving family needs across generations.

The investments we have made in our platform, product suite, and capital structure position us to serve that opportunity with discipline, consistency, and scale. Overall, 2025 marked an important step forward for Finance Of America Companies Inc., not only in what we earned, but in how repeatable and durable those earnings have become. I will now turn the call over to Kristen N. Sieffert to discuss the operational drivers behind this performance and positive early signals in 2026.

Kristen N. Sieffert: Thanks, Graham, and good afternoon, everyone. The fourth quarter marked an inflection point for the platform. 2025 was a year of disciplined investment, modernizing our technology stack, embedding AI across the customer journey, and strengthening marketing precision. As we enter 2026, those investments are translating into measurable operating momentum. For the full year, we funded $2,400,000,000 of originations, a 24% increase compared to 2024. Fourth quarter funded volume totaled $619,000,000, closing the year with strong sequential performance. In a rate-sensitive environment, this growth reflects improved funnel productivity and the durability of our category leadership. As the reverse mortgage market leader, making the largest marketing investments in the space, we are uniquely positioned to see demand trends develop in real time.

In January, inquiry volume increased more than 75% year over year, while speed to answer calls improved by over 60%. These improvements drove opportunities approximately 30% above baseline while reducing cost per opportunity by 12% compared to 2025, demonstrating early operating leverage within our acquisition engine. A key structural differentiator is the rollout of Joy, our AI-powered customer ambassador. Joy is delivering more than five times the conversion performance of our prior third-party call center, while materially improving responsiveness across peak and off hours. This is not simply a productivity improvement; it represents a permanent shift in our acquisition model, lowering variable costs while increasing scalability and conversion efficiency. Our digital acquisition engine is also accelerating performance.

So far in Q1, prequalification engagement has doubled compared to 2025. Among customers choosing the digital path, we saw a 47% increase in speed to application, a 36% improvement in speed to submission, and a 77% increase in submission rate. We expect these gains to shorten cycle times, improve pull-through, and lower our cost to produce. We are also seeing external signals that reflect an increase in consumer interest in reverse mortgages. Google Trends data shows reverse mortgage-related search activity trending approximately 40% higher year over year at seasonal peaks, significantly outpacing prior year trends. Given our scale and brand leadership, increased category search activity positions us well to capture incremental demand. Underpinning this progress are our people and culture.

We are a team willing to challenge legacy approaches, embrace innovation, and hold ourselves to a higher standard of execution. Our team is and will remain a critical driver of our performance. As we look to the year ahead, we have clear visibility into the drivers of performance, stronger cross-functional alignment, and a structurally more efficient platform. The work completed in 2025 has improved final funnel productivity, reduced customer acquisition friction, expanded operating leverage, and has positioned us for a breakthrough year. As volumes grow, we expect these dynamics to translate into sustained earnings expansion and margin improvement. With that, I will turn it over to Matthew A. Engel to walk through the financials.

Matthew A. Engel: Thank you, Kristen, and good afternoon, everyone. The fourth quarter was the latest example of solid execution at Finance Of America Companies Inc., with full year results highlighting consistent operating progress and our ability to execute effectively as opportunities arise. For the full year, Finance Of America Companies Inc. reported GAAP net income of $110,000,000, or $5.04 per basic share. These results reflect the impact of interest rate and credit spread movements, partially offset by changes in model assumptions on the fair value of our residual assets, which, as we have discussed previously, are noncash in nature.

On an adjusted basis for the full year, we generated net income of $74,000,000, or $3.04 per share, representing a 429% increase compared to 2024. We also generated adjusted EBITDA of $143,000,000, a 138% increase year over year. These results reflect our ability to realize the platform's operating leverage and continued improvement in earnings quality as the platform has scaled. Total revenue increased 26% year over year to $497,000,000 in 2025, compared to $394,000,000 in 2024. This $103,000,000 increase in revenue directly translated into improved profitability as fixed expenses remained largely consistent year over year. Excluding noncash fair value changes to our balance sheet, revenue increased approximately $83,000,000 year over year.

After tax, this equates to roughly $61,000,000 of incremental earnings, which closely aligns with the $60,000,000 year-over-year increase in adjusted net income. This demonstrates the operating leverage embedded in the platform as volume scales. Turning to our fourth quarter, we reported a GAAP net loss of $21,000,000, or $1.30 per basic share. While our Q4 results were impacted by fair value movements, so far in 2026, interest rates have moved lower and spreads have tightened. At current levels, we would expect our first quarter fair value adjustments to more than offset the fourth quarter impact.

On an adjusted basis for the fourth quarter, we generated adjusted net income of $414,000,000, or $0.69 per share, representing a 180% increase compared to 2024. Adjusted EBITDA for the quarter totaled $28,000,000, up 56% year over year, reflecting continued operating momentum and improved earnings as the platform has scaled. Despite the volatility in GAAP, adjusted earnings have remained resilient, reflecting the strength of the core economics and the consistency of cash generation across the platform. As mentioned earlier, the company recognized adjusted earnings per share of $3.04 for the full year 2025, which was above our stated guidance range.

As Graham noted earlier, because securitization timing can shift between quarters, we view 2025 combined as a reasonable reference point for the underlying earnings power of the company. In 2025, the company reported adjusted net income of $47,000,000 and adjusted earnings per share of $2.05. This would approximate $4.10 per share on an annualized basis. Looking ahead to 2026, we continue to expect volume growth of 15% to 25% year over year, a range of $2.8 to $3.1 billion, supporting our previously communicated 2026 adjusted earnings per share guidance of $4.25 to $4.75 per share. For the full year, the company's cash and cash equivalents increased by $42,000,000.

During 2025, Finance Of America Companies Inc. generated over $150,000,000 of cash flows through our core origination and capital markets activities. This reflects stronger performance driven by higher funded volumes, improved operating leverage, and meaningful bottom-line expansion. In addition to the $150,000,000 generated from our core operations, we raised an additional $40,000,000 in the form of a 0% coupon convertible note and a $50,000,000 preferred equity investment. From these sources of cash, we paid down $117,000,000 of corporate debt and working facilities, paid $40,000,000 of interest on our non-funding financing, and used $40,000,000 to acquire the first half of Blackstone's equity position. Please see our earnings supplement and our Investor Relations website for further detail.

In February, we completed the second half of the Blackstone purchase, fully exiting that legacy ownership position. Looking forward to 2026, we anticipate that cash flows from our core origination and asset-level capital markets financing activities will be sufficient to fund both the acquisition of PHH as well as the pay down of the $150,000,000 of senior secured notes. Once the senior secured notes have been paid off, we will be left with only $40,000,000 of convertible notes and $150,000,000 of exchangeable corporate bonds, both of which have the ability to convert to equity.

Lastly, given the company's strong performance and investments made by our strategic partners, Alliance America ended 2025 with a tangible equity position 117% greater than December 2024. With that, I will turn it back to Graham for closing remarks.

Graham A. Fleming: Thank you, Matt. As we reflect on 2025, the takeaway is straightforward. The fundamentals of our business are working, our operating platform is performing consistently, margins remain disciplined, and execution continues to improve. Finance Of America Companies Inc.'s earnings power is becoming more visible and durable. As the business scales, adjusted results increasingly reflect the underlying economics of the platform and are less influenced by timing-related volatility. We enter 2026 expecting to grow volume by 15% to 25%, generate cash flow from originations and capital markets similar to 2025 of $150,000,000, and use these proceeds to pay down debt and delever our balance sheet.

Over the coming years, we expect Finance Of America Companies Inc. to be free of all corporate debt, leaving our company better capitalized, more resilient, and well positioned to expand our reach. We believe demographic trends continue to support long-term demand for responsible home equity solutions. The progress we have made across our platform, products, and capital structure enables us to meet those evolving needs with discipline and consistency. As we continue building a more scalable, technology-enabled platform, we remain confident that there is a better way with Finance Of America Companies Inc. for our customers, our partners, and our shareholders. And with that, we will open the call for any questions.

Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star then the number 1 on your keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, simply press star 1 again. We will pause just for a moment to compile the roster. Your first question comes from the line of Ethan Brown with Omega. Your line is open.

Ethan Brown: Hi. Nice job on the quarter. I have a question trying to clarify what you said about the balance sheet and the uses of cash. I heard you can fund the PHH acquisition and pay down some senior secured notes. When you consider all the free cash that you have coming in, and you consider the share repurchase program that you have, are you going to be able to extend the share repurchases beyond just what you bought from Blackstone? Or is that going to be a 2026 strategy for capital allocation, or should we expect share repurchases to be larger in 2027 and going forward?

Matthew A. Engel: Great question, Ethan. Thank you. I think, really, we do not have any announced share repurchase activities beyond the Blackstone repurchase, which we know to be the first half of that in the fourth quarter. We completed that purchase in February 2026. That is now behind us. With that in mind, looking at free cash flow from this year, really, our focus is retiring that $150,000,000 of corporate debt. Once that has been extinguished, then I think we are in the world where you are talking about potentially doing further share repurchases into 2027. But for 2026, right now, our goal would be paying off the $150,000,000 of corporate debt, which again would be a little early.

I think our latest amendments to the facility only require us to pay off $60,000,000 by this November, and we can extend $90,000,000. But we have drawn up plans. We would like to see if we can retire that full $150,000,000 during 2026.

Ethan Brown: Just a follow-up. When would you see the $90,000,000, the full $150,000,000, or the $90,000,000 in 2027 being paid down? And when would the gates be wide open to more aggressive share repurchases?

Matthew A. Engel: Yes. So, again, there is a lot in a long year with a lot of activity to do, but our goal would be to pay off that $60,000,000 and the $90,000,000 in 2026. And so the gates would be open for further share repurchase activity going into 2027. The outside date for that payment, Ethan, will be November 2027. But our expectation is we will pay the $150,000,000 in November 2026.

Ethan Brown: Thank you.

Operator: Your next question comes from the line of Leon Cooperman with Omega Family Office. Your line is open.

Leon Cooperman: Yeah. I think you have answered the question through Ethan. I got a question on Bloomberg from a friend of mine. Can you ask the following question of Finance Of America Companies Inc.? Do you have enough cash generation to pay off the first lien this year in its entirety? The answer to that is yes. So how much cash do you think it will leave you with, and do you think you will be in position to buy back stock this year? And you are saying you do not think about stock back this year?

Matthew A. Engel: Yeah. I think it sounds like pretty much the question that Ethan asked as well. So, again, our goal for this year is to pay off the entire $150,000,000. I know $60,000,000 we have agreed to pay down this year for sure. $90,000,000 could extend, but based upon our plans for the year, we think we can retire the entire $150,000,000 this year. And then next year, we would have all free cash flow to do other things with, including repurchasing shares if that was an option.

Leon Cooperman: Okay. In terms of what you have, so many different measures of earnings. I asked this before. What is the measure that you run the company by that is most important to you?

Matthew A. Engel: So we look at the adjusted EPS, ANI, which was $3.04. If you recall, we gave guidance, repeated guidance, of between $2.60 and $3.00 for last year, and we finished the year at $3.04, so just over the high end of the range. This year's guidance is $4.25 to $4.75. As we started the year here and we look at the early funnel metrics, we are confident that we will be in that range again in 2026.

Leon Cooperman: So your stock is less than four times earnings?

Matthew A. Engel: Yes.

Leon Cooperman: What makes it—why do you want to wait till 2027 and buy it back? I would recommend you buy it back sooner.

Graham A. Fleming: It is a good question, Lee. I think as we think about alternatives of cash—buying back shares and extinguishing debt—there are certainly arguments on both sides of that equation. Different stakeholders have different points of view, and certainly removing the corporate debt overhang is beneficial, helps with the rating agencies’ overall perception of the company, which benefits equity holders in the long term. But at these prices, I think the share purchase options are also attractive. So we will definitely weigh both of those. But at this point in time, our focus is on retiring the corporate debt, but that could change either way as the year unfolds.

Leon Cooperman: And all the best. Thank you.

Graham A. Fleming: Thanks, Lee.

Operator: Your next question comes from the line of Eric Hagen with BTIG. Your line is open.

Brendan Greenie: Hi. This is Brendan Greenie on for Eric. Can you discuss the current warehouse financing conditions for both new originations and MSRs? And more specifically, given the consolidation we have seen in the space over the past few years, do you believe that dynamic has actually improved funding terms and availability for the remaining players in the space?

Matthew A. Engel: Yeah. I maybe cannot speak to the other players in the space, but from our own experience, I would say that warehouse financing is ample. We have increased some of our facilities. We have added some new financing partners. Credit has been pretty readily available in the space. We have talked about in previous calls, we are pursuing financing on our mortgage servicing right asset, or HMBS asset. That is going pretty well. So I think that overall, we view credit positively in the space. As mentioned earlier, we have seen spreads generally tighten across the spectrum, so we are seeing some benefit there as well.

I suspect others are seeing similar things, but I have no firsthand knowledge of what our competitors are seeing.

Graham A. Fleming: Yeah. We are generally seeing, as we are renewing our facilities over the course of the year, that we are gaining improved terms, either higher advance rates or lower spreads. So we have no concerns about—we have ample warehouse liquidity, and we continue to increase where we can and add new participants as necessary.

Brendan Greenie: Thank you very much.

Operator: And with no further questions in queue, I would like to turn the conference back over to Graham A. Fleming for closing remarks.

Graham A. Fleming: I want to thank everybody for joining the call today. We look forward to updating you on our progress in May with our Q1 results, and have a great afternoon, everybody. Thank you.

Operator: This concludes today's conference call. You may now disconnect.

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