Q2 2021 Finance of America Companies Inc Earnings Call

August 12, 2021

Okay.

[music].

Good morning, ladies and gentlemen, and welcome to the finance of Americas second quarter, 'twenty 'twenty, One earnings conference call.

Operator: Good morning, ladies and gentlemen, and welcome to the Finance of America's Q2 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Michael Fant, Senior Vice President of Finance at Finance of America. Please go ahead, Michael.

[Operator 3]: Good morning, ladies and gentlemen, and welcome to the Finance of America's Q2 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Michael Fant, Senior Vice President of Finance at Finance of America. Please go ahead, Michael.

At this time all participants are in a listen only mode.

We will conduct a question answer session and instructions will follow at that time.

As a reminder, this call will be recorded I would now like to turn the conference over to Michael <unk> Senior Vice President of Finance at Finance of America.

Please go ahead Michael.

Thank you.

Good morning, everyone and welcome to finance of America's second quarter earnings call.

Michael Fant: Thank you. Good morning, everyone, and welcome to Finance of America's second quarter earnings call. With me today are Patty Cook, Chief Executive Officer, Johan Gericke, Chief Financial Officer, and Graham Fleming, President. As a quick reminder, this call is being recorded, and you can find the earnings release and presentation on our investor relations website at www.financeofamerica.com. 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 effort, discussed on today's call, in our earnings press release and on the investor relations page of our website. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements regarding the company's expected operating and financial performance for future periods.

With me today are Patty Cook, Chief Executive Officer, Johan Garrett, Chief Financial Officer, and Graham Fleming President.

As a quick reminder, this call is being recorded and you can find the earnings release and presentation on our Investor Relations website at Www Dot Finance of America Dot com.

In addition, we will refer to certain non-GAAP financial measures on this call you can find reconciliations of non-GAAP to GAAP to GAAP financial measures to the extent available without unreasonable effort discussed on today's call in our earnings press release and on the Investor Relations page of our website.

You can find reconciliations of non-GAAP to GAAP financial measures, to the extent available without unreasonable effort, discussed on today's call, in our earnings press release and on the investor relations page of our website. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements 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 yesterday's news release.

Also I would like to remind everyone that comments on this conference call may be forward looking statements 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 yesterday's news release.

Michael Fant: 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 yesterday's news 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, including those that are described in the risk factor section of Finance of America's Form S-1 originally filed with the SEC on 25 May 2021. We are not undertaking any commitment to update these statements if conditions change. Please note these are interim period financials and are unaudited. On today's call, Patty will begin with a brief discussion of our business model. Johan will cover the financial results, and Graham will spotlight our reverse origination segment. Now, I'd like to turn the call over to Finance of America's Chief Executive Officer, Patty Cook. Patty?

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, including those that are described in the risk factors section of finance of America's form S. One originally filed with the SEC on May 25th 2021.

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, including those that are described in the risk factor section of Finance of America's Form S-1 originally filed with the SEC on 25 May 2021. We are not undertaking any commitment to update these statements if conditions change.

We are not undertaking any commitment to update these statements if conditions change please.

Please note. These are interim period financials and are unaudited.

Please note these are interim period financials and are unaudited. On today's call, Patty will begin with a brief discussion of our business model. Johan will cover the financial results, and Graham will spotlight our reverse origination segment. Now, I'd like to turn the call over to Finance of America's Chief Executive Officer, Patty Cook. Patty?

On today's call how do we will begin with a brief discussion of our business model Johan will cover the financial results and Graham will spotlight a reverse origination segment.

Now I'd like to turn the call over to finance for the Americas, Chief Executive Officer, Patty Cook Patty.

Thanks, Michael and good morning, everyone.

Patty Cook: Thanks, Michael, and good morning, everyone. Before we get started, I want to mention a few significant changes for Finance of America that happened this quarter. Effective 1 April, we completed our business combination and began trading on the New York Stock Exchange on 5 April. Additionally, we began the integration of our home improvement business along with the previously announced acquisition of Parkside Lending in May. We are really excited about the value these investments will bring to our shareholders over time. Now, let's turn to slide three of the presentation. As our results this quarter demonstrated, there is significant value in our diversification. Our model's key competitive advantages include an extensive product set, multiple distribution channels, and bespoke capital markets capabilities.

Patricia Cook: Thanks, Michael, and good morning, everyone. Before we get started, I want to mention a few significant changes for Finance of America that happened this quarter. Effective 1 April, we completed our business combination and began trading on the New York Stock Exchange on 5 April. Additionally, we began the integration of our home improvement business along with the previously announced acquisition of Parkside Lending in May. We are really excited about the value these investments will bring to our shareholders over time. Now, let's turn to slide three of the presentation.

Before we get started I want to mention a few significant changes for finance of America, that's happened in the quarter.

That's debatable.

We completed our business combination and began trading on the New York stock Exchange on April.

Additionally, we began the integration of our home improvement business.

Along with the previously announced acquisition of corn side lending you may.

We're really excited about the value of these investments will bring to our shareholders over time.

Now, let's turn to slide three of the presentation.

As our results this quarter demonstrated significant value.

As our results this quarter demonstrated, there is significant value in our diversification. Our model's key competitive advantages include an extensive product set, multiple distribution channels, and bespoke capital markets capabilities. The Finance of America business model is unique in that we have built a platform that includes mortgage, reverse, commercial, and most recently, home improvement loans, together with multiple distribution channels to serve our customers as they prefer.

Okay.

Our model key competitive advantages include an extensive product set.

Multiple distribution channels and bespoke capital markets capability.

The finance American business model is unique in that we have built a platform that includes mortgage we're very commercial and most recently home improvement loans.

Patty Cook: The Finance of America business model is unique in that we have built a platform that includes mortgage, reverse, commercial, and most recently, home improvement loans, together with multiple distribution channels to serve our customers as they prefer. In addition, our fee-for-service businesses and portfolio management segment produce recurring revenue streams that help limit the effects of a cyclical mortgage market. Each of these businesses is supported by unique tailwinds that provide resiliency to the platform through varying interest rate and economic environments. In fact, every segment generated meaningful growth in revenue year to date compared to last year. As an example, revenue growth in our reverse business is driven by an increasing population of Baby Boomers who would like to age in place but have inadequate savings for retirement. Yet, they have significant untapped wealth in their homes. A reverse mortgage is an efficient way to access that equity.

Together with multiple distribution channels to serve our customers as they prefer in.

In addition, our fee for service.

In addition, our fee-for-service businesses and portfolio management segment produce recurring revenue streams that help limit the effects of a cyclical mortgage market. Each of these businesses is supported by unique tailwinds that provide resiliency to the platform through varying interest rate and economic environments. In fact, every segment generated meaningful growth in revenue year to date compared to last year. As an example, revenue growth in our reverse business is driven by an increasing population of Baby Boomers who would like to age in place but have inadequate savings for retirement.

In portfolio management segment produce recurring revenue stream, that's helped limit the exact cyclical mortgage market.

Each of these businesses is supported by unique tailwind that provide resiliency to the platform to varying interest rate and economic environment.

In fact every segment generated meaningful growth in revenue year to date compared to last year.

As an example revenue growths in our reverse business is driven by an increasing population of baby boomers, who would like to age in place, but have inadequate savings for retirement.

Yes, they have significant untapped well in their homes.

Yet, they have significant untapped wealth in their homes. A reverse mortgage is an efficient way to access that equity. Another example of the diversified nature of our model relates to our extensive capital markets capability, which allows us to seamlessly connect borrowers with investors in order to manage liquidity, transfer risk, and optimize funding costs. This was evidenced in our recent securitization of non-owner-occupied loans completed in June, the first of its kind for our company, which freed us from the constraints of the recent GSE cap.

Our reverse mortgage is an efficient way to access that equity.

Another example of the diversified nature of our model relates to our extensive capital markets capability, which allows us to seamlessly connect borrowers with investors in order to manage liquidity transfer risk and optimize funding cost.

Patty Cook: Another example of the diversified nature of our model relates to our extensive capital markets capability, which allows us to seamlessly connect borrowers with investors in order to manage liquidity, transfer risk, and optimize funding costs. This was evidenced in our recent securitization of non-owner-occupied loans completed in June, the first of its kind for our company, which freed us from the constraints of the recent GSE cap. Our powerful end-to-end platform enables us to identify gaps in the market and introduce consumer-centric products that add to our competitive advantage. This quarter, we funded the first EquityAvail loan, an innovative product which combines many of the benefits of traditional and reverse mortgages. It is designed to provide greater financial flexibility for homeowners at or near retirement. Identifying and meeting customer needs is what we do best, and we look forward to continuing to innovate across our platform.

This was evidenced in our recent securitization of non owner occupied loans completed in June the first of its calling for our company, which freed up from the constraints of the recent GSE cap.

Our powerful end to end platform enables us to identify GAAP to the market and introduce consumer centric products.

Our powerful end-to-end platform enables us to identify gaps in the market and introduce consumer-centric products that add to our competitive advantage. This quarter, we funded the first EquityAvail loan, an innovative product which combines many of the benefits of traditional and reverse mortgages. It is designed to provide greater financial flexibility for homeowners at or near retirement. Identifying and meeting customer needs is what we do best, and we look forward to continuing to innovate across our platform. Let's turn to highlights for the quarter on slide four.

Our competitive advantage this quarter, we funded the first equity avail loan and innovative products, which combine many of the benefits of traditional and with various mortgages. It is designed to provide greater financial flexibility for homeowners at or near retirement.

Identifying and meeting customer needs is what we do best and we look forward to continuing to innovate across our platform.

Let's turn to highlights for the quarter on slide four.

Patty Cook: Let's turn to highlights for the quarter on slide four. Our mortgage segment was not immune to the industry dynamics, and we saw declines in revenues aligned with our peers. In contrast, we saw substantial growth in our reverse, commercial, and lender services segments. Both reverse and lender services generated record revenues in the quarter, and in combination, revenue growth from these three businesses offset a portion of our mortgage revenue decline. In mortgage, results in the TPO channel were particularly stressed due to steep margin declines and elevated costs as we integrated the Parkside lending acquisition. On a positive note, we have made progress with the integration of our home improvement business and expect it to contribute to the bottom line starting in Q4. We also saw a shift from refinance to purchase volume, and our distributed retail channel is well-suited to serve this market dynamic.

Our mortgage segment was not immune to the industry dynamic and we saw declines in revenue aligned with our peers in.

Our mortgage segment was not immune to the industry dynamics, and we saw declines in revenues aligned with our peers. In contrast, we saw substantial growth in our reverse, commercial, and lender services segments. Both reverse and lender services generated record revenues in the quarter, and in combination, revenue growth from these three businesses offset a portion of our mortgage revenue decline. In mortgage, results in the TPO channel were particularly stressed due to steep margin declines and elevated costs as we integrated the Parkside lending acquisition.

In contrast, we saw had substantial growth in our reverse commercial and lender It services segment.

To a burst of lender services generated record revenue quarter and in combination revenue growth from these three businesses.

Set a portion of our mortgage revenue decline.

In mortgage results in the GPO channel, where particularly stressed due to the steep margin declines and elevated costs as we integrated the part side lending acquisition.

On a positive note we have made progress with the integration of our home improvement business and expect it to contribute to the bottom line starting in Q4.

On a positive note, we have made progress with the integration of our home improvement business and expect it to contribute to the bottom line starting in Q4. We also saw a shift from refinance to purchase volume, and our distributed retail channel is well-suited to serve this market dynamic. In fact, purchase-funded volumes grew from $2.7 billion to 3.5 billion quarter over quarter.

We also saw a shift from refinance to purchase volume in our distributed retail channel is well suited to serve this market dynamic.

In fact purchase funded volumes grew from $2.7 billion to $3.5 billion quarter over quarter.

Patty Cook: In fact, purchase-funded volumes grew from $2.7 billion to 3.5 billion quarter over quarter. Margins stabilized in the second quarter and have shown modest improvement in July and August. That said, we expect to see continued pressure in the mortgage segment for the remainder of the year. With that, I would like to turn the call over to Johan to discuss our second quarter results in more detail. Johan?

Margin stabilized in the second quarter and have shown modest improvement in July and August.

Margins stabilized in the second quarter and have shown modest improvement in July and August.That said, we expect to see continued pressure in the mortgage segment for the remainder of the year. With that, I would like to turn the call over to Johan to discuss our second quarter results in more detail. Johan?

That said, we expect to see continued pressure in the mortgage segment for the remainder of the year.

With that I would like to turn the call over to Johan to discuss our second quarter results in more detail.

Uh huh.

Thanks Patty.

As mentioned earlier this is our first quarter as a publicly traded company and our results include several nonrecurring items related to the spec transaction, which I'll cover later in the presentation.

Michael Fant: Thanks, Patty. As mentioned earlier, this is our first quarter as a publicly traded company, and our results include several non-recurring items related to the SPAC transaction, which I will cover later in the presentation. Beginning on slide six, we generated $57 million of adjusted net income or $0.30 per share in Q2, compared to $107 million or $0.56 per share last quarter. Our adjusted net income decreased by $50 million quarter over quarter, despite the decline in mortgage revenue of more than double that amount. This is our diversified model in action. For the company overall, on a GAAP basis, we reported a net loss of $15 million for the quarter, compared to net income of $124 million in the first quarter and $146 million in the second quarter of 2020.

Johan Gericke: Thanks, Patty. As mentioned earlier, this is our first quarter as a publicly traded company, and our results include several non-recurring items related to the SPAC transaction, which I will cover later in the presentation. Beginning on slide six, we generated $57 million of adjusted net income or $0.30 per share in Q2, compared to $107 million or $0.56 per share last quarter. Our adjusted net income decreased by $50 million quarter over quarter, despite the decline in mortgage revenue of more than double that amount. This is our diversified model in action.

Beginning on slide six we.

We generated $57 million of adjusted net income or <unk> 30 per share in Q2, compared to 107 million or <unk> 56 per share last quarter.

<unk> net income decreased by $50 million quarter over quarter. Despite the decline in mortgage revenue of more than double that amount.

This is our diversified model in action.

For the company overall on a GAAP basis, we reported a net loss of $15 million for the quarter compared to net income of $124 million in the first quarter and 146 million in the second quarter of 2020.

For the company overall, on a GAAP basis, we reported a net loss of $15 million for the quarter, compared to net income of $124 million in the first quarter and $146 million in the second quarter of 2020. The Q2 loss resulted from $20 million of fair value marks and $43 million of non-recurring items related to the business combination. Adjusted EBITDA of $87 million for the second quarter of 2021 was down $67 million or 44% compared to Q1, as the $102 million decrease in mortgage revenue was partially offset by increased revenues in reverse, commercial, and lender services.

The Q2 loss resulted from $20 million of fair value marks and 43 million of nonrecurring items related to the business combination.

Michael Fant: The Q2 loss resulted from $20 million of fair value marks and $43 million of non-recurring items related to the business combination. Adjusted EBITDA of $87 million for the second quarter of 2021 was down $67 million or 44% compared to Q1, as the $102 million decrease in mortgage revenue was partially offset by increased revenues in reverse, commercial, and lender services. Turning to our segments and starting with our mortgage originations business on slide seven, net rate lock volume of $6.7 billion was down 21% from $8.4 billion in the prior quarter and relatively flat year over year. Mortgage originations margin declined 18% from the prior quarter, and combined with lower volume, this resulted in a 32% decrease in segment revenue.

Adjusted EBITDA of $87 million for the second quarter of 'twenty, one was down $67 million or 44% compared to Q1 as the 102 million deep.

A decrease in mortgage revenue was partially offset by increased revenues and diverse commercial and lender services.

Turning to our segments and starting with our mortgage originations business on slide seven.

Turning to our segments and starting with our mortgage originations business on slide seven, net rate lock volume of $6.7 billion was down 21% from $8.4 billion in the prior quarter and relatively flat year over year. Mortgage originations margin declined 18% from the prior quarter, and combined with lower volume, this resulted in a 32% decrease in segment revenue. The Q2 2021 pre-tax loss of $6 million, compared to a pre-tax income of $96 million for the prior quarter, was predominantly due to the drop in revenue mentioned earlier.

Net rate lock volume up $6.7 billion was down 21% from $8.4 billion in the prior quarter and relatively flat year over year.

Mortgage originations margin declined to 18% from the prior quarter and combined with lower volume. This resulted in a 32% decrease in segment revenue.

The second quarter 'twenty, one pre tax loss of $6 million compared to a pretax income of $96 million for the prior quarter was predominantly due to the drop in revenue mentioned earlier.

Michael Fant: The Q2 2021 pre-tax loss of $6 million, compared to a pre-tax income of $96 million for the prior quarter, was predominantly due to the drop in revenue mentioned earlier. The loss also includes non-recurring costs related to the business combination and the impact associated with previously announced acquisitions. Combined, these two items totaled over $14 million. Turning to slide eight, we are very proud of the results generated in our reverse business. Funded volumes were up 32% quarter over quarter to $1 billion, our highest quarter ever. This generated segment revenue of $95 million and pre-tax income of $53 million for Q2 2021, up 38% and 18% respectively compared to prior quarter levels. The reverse segment results also include $4 million of non-recurring costs related to the business combination.

<unk> also includes nonrecurring costs related to the business combination and the impact associated with previously announced acquisitions.

The loss also includes non-recurring costs related to the business combination and the impact associated with previously announced acquisitions. Combined, these two items totaled over $14 million. Turning to slide eight, we are very proud of the results generated in our reverse business. Funded volumes were up 32% quarter over quarter to $1 billion, our highest quarter ever. This generated segment revenue of $95 million and pre-tax income of $53 million for Q2 2021, up 38% and 18% respectively compared to prior quarter levels. The reverse segment results also include $4 million of non-recurring costs related to the business combination.

Buying these.

These two items totaled over $14 million.

Turning to slide eight.

We're very proud of the results generated in out of this business.

Funded volumes were up 32% quarter over quarter to 1 billion, our highest quarter ever.

This generated segment revenue of $95 million and pre tax income of $53 million for the second quarter of 'twenty, one up 38 at 18%, respectively compared to prior quarter levels.

The reverse segment results also include $4 million of nonrecurring costs related to the business combination.

Turning to slide nine on the commercial side funded volumes continued to rebuild from 2020 levels and were up 17% on a sequential quarter basis and $400 million as.

Michael Fant: Turning to slide nine, on the commercial side, funded volumes continued to rebuild from 2020 levels and were up 17% on a sequential quarter basis to $400 million. As a result, revenues were up 64% from Q1, and pre-tax income for the segment increased $3 million despite a $1 million non-recurring cost related to the business combination. Turning to portfolio management on slide 10, segment profitability was negatively impacted by $20 million in fair value marks, along with $7 million of non-recurring costs related to the business combination. The fair value marks are primarily driven by home price appreciation and higher expected prepay speeds observed in securitized mortgage assets and MSR. Our capital markets team completed three securitizations totaling over $1.1 billion in UPB, including our inaugural non-owner-occupied securitization.

Turning to slide nine, on the commercial side, funded volumes continued to rebuild from 2020 levels and were up 17% on a sequential quarter basis to $400 million. As a result, revenues were up 64% from Q1, and pre-tax income for the segment increased $3 million despite a $1 million non-recurring cost related to the business combination. Turning to portfolio management on slide 10, segment profitability was negatively impacted by $20 million in fair value marks, along with $7 million of non-recurring costs related to the business combination.

As a result revenues were up 64% from Q1 and pre tax income for this segment increased $3 million, despite a $1 million nonrecurring costs related to the business combination.

Turning to portfolio management on slide deck SEC.

Profitability was negatively impacted by $20 million in fair value marks along with $7 million of nonrecurring costs related to the business combination.

Fair value marks are primarily driven by home price appreciation and higher expected prepay speeds observed in securitized mortgage assets and MSR.

The fair value marks are primarily driven by home price appreciation and higher expected prepay speeds observed in securitized mortgage assets and MSR. Our capital markets team completed three securitizations totaling over $1.1 billion in UPB, including our inaugural non-owner-occupied securitization. This segment also includes our MSR assets that grew by $23 million over Q1 to $291 million, with UPB of $30 billion. As shown on slide 11, lender services delivered another record quarter, with total revenue of $81 million, up considerably compared to prior quarter and year-ago levels.

Our capital markets team completed three securitizations totaling over $1.1 billion in <unk> <unk>.

Polluting and overall non owner occupied securitization.

This segment also includes our MSR assets that grew by $23 million over Q1 to $291 million with UBB of $30 billion.

Michael Fant: This segment also includes our MSR assets that grew by $23 million over Q1 to $291 million, with UPB of $30 billion. As shown on slide 11, lender services delivered another record quarter, with total revenue of $81 million, up considerably compared to prior quarter and year-ago levels. Pre-tax income for the second quarter in lender services, like other segments, was impacted by $3 million of non-recurring costs related to the business combination. Segment growth drivers include continued growth in third-party clients, doing more business with existing clients, and increased adoption of services by FOA lending segment. Turning to slide 13, I would like to spend a few minutes discussing the accounting impact of the business combination on our financial statements. Due to the nature of the transaction under GAAP regulations, FOA was determined to be an accounting acquirer in the business combination.

Okay.

As shown on slide 11 lenders.

And then the services delivered another record quarter with total revenue of $81 million.

<unk> compared to prior quarter and year ago levels.

Pretax income for the second quarter and lender services like other segments was impacted by $3 million of nonrecurring costs related to the business combination.

Pre-tax income for the second quarter in lender services, like other segments, was impacted by $3 million of non-recurring costs related to the business combination. Segment growth drivers include continued growth in third-party clients, doing more business with existing clients, and increased adoption of services by FOA lending segment. Turning to slide 13, I would like to spend a few minutes discussing the accounting impact of the business combination on our financial statements. Due to the nature of the transaction under GAAP regulations, FOA was determined to be an accounting acquirer in the business combination.

Segment growth drivers include continued growth in third party clients.

More business with existing clients and increased.

Adoption of services by FHA lending segments.

Turning to slide 13, I would like to spend a few minutes discussing the accounting impact of the business combination on our financial statements.

Due to the nature of the transaction and the GAAP regulation.

<unk> was determined to be an accounting acquirer in the business combination.

Accordingly, the company booked $1.1 billion of goodwill and 688 million of intangible assets to the balance sheet.

Michael Fant: Accordingly, the company booked $1.1 billion of goodwill and $688 million of intangible assets to the balance sheet. In connection with the transaction, the company also redeemed the non-controlling interest in Finance of America Commercial LLC for a purchase price of $203 million, and FOA now wholly owns this business. For the quarter, the income statement was negatively impacted by $43 million in non-recurring expenses related to the business combination. This includes share-based compensation and other transaction-related expenses. Lastly, turning to capital allocation, we will continue to make investments that reduce the cyclicality of our earnings and remain focused on maximizing shareholder value over time. Capitalizing on M&A opportunities is part of our DNA, and we remain proactive in identifying accretive market opportunities that will further complement our business and drive profitable growth. Let me now hand over to Graham, who is going to spotlight our reverse mortgage business. Graham?

Accordingly, the company booked $1.1 billion of goodwill and $688 million of intangible assets to the balance sheet. In connection with the transaction, the company also redeemed the non-controlling interest in Finance of America Commercial LLC for a purchase price of $203 million, and FOA now wholly owns this business. For the quarter, the income statement was negatively impacted by $43 million in non-recurring expenses related to the business combination. This includes share-based compensation and other transaction-related expenses.

In connection with the transaction the company also redeemed the Noncontrolling interest and finance as America commercial LLC.

The purchase price of $203 million.

<unk> now a wholly owned this business.

For the quarter. The income statement was negatively impacted by $43 million and nonrecurring expenses related to the business combination.

This includes share based compensation and other transaction related expenses.

Lastly, turning to capital allocation, we will continue to make investments that reduce the cyclicality of our earnings and remain focused on maximizing shareholder value over time.

Lastly, turning to capital allocation, we will continue to make investments that reduce the cyclicality of our earnings and remain focused on maximizing shareholder value over time. Capitalizing on M&A opportunities is part of our DNA, and we remain proactive in identifying accretive market opportunities that will further complement our business and drive profitable growth. Let me now hand over to Graham, who is going to spotlight our reverse mortgage business. Graham?

Capitalizing on M&A opportunities as part of our DNA and we remain proactive in identifying accretive market opportunities that will further complement our business and drive profitable growth.

Let me now hand over to Greg who is going to spotlight our reverse mortgage business.

Yes, Thanks, Johan as mentioned earlier, our reverse origination segment originated over $1 billion for the quarter.

Patty Cook: Yeah, thanks, Johan. As mentioned earlier, our reverse origination segment originated over $1 billion for the quarter, a first for the company, and we believe this business is poised for further growth. Turning to pages 15 through 17, you can see that the average senior citizen in America hasn't saved enough for retirement. However, 84% of senior homeowners hold more than 50% of their wealth in the equity of their home. Our experience has shown that many seniors are unclear how to access this equity as part of their retirement plan. A reverse mortgage is a flexible financial tool that allows seniors to convert the equity in their home to cash. This can be used to eliminate monthly mortgage payments and supplement shortfalls in retirement income.

Graham Fleming: Yeah, thanks, Johan. As mentioned earlier, our reverse origination segment originated over $1 billion for the quarter, a first for the company, and we believe this business is poised for further growth. Turning to pages 15 through 17, you can see that the average senior citizen in America hasn't saved enough for retirement. However, 84% of senior homeowners hold more than 50% of their wealth in the equity of their home. Our experience has shown that many seniors are unclear how to access this equity as part of their retirement plan. A reverse mortgage is a flexible financial tool that allows seniors to convert the equity in their home to cash.

For the company and we believe this business is poised for further growth.

Turning to pages 15 through 17, you can see that the average senior citizen in America Hasnt saved enough retirement, however, 84% of senior homeowners hold more than 50% of their wealth in the equity in their homes.

Our experience has shown that many seniors are unclear how to access this equity as part of their retirement plan.

Reverse mortgage is a flexible financial tool that allows seniors to convert the equity in their home to cash. This can be used to eliminate monthly mortgage payments and supplement shortfalls and retirement income.

This can be used to eliminate monthly mortgage payments and supplement shortfalls in retirement income. Turning to slide 18, Finance of America is a leader in the reverse mortgage industry and has been the top producer in the wholesale channel for more than a decade. The opportunity is to work with industry peers and partners to increase awareness of product benefits, leading to greater adoption. Therefore, we are focused on educating seniors on their opportunities in retirement, and we are well-positioned to make home equity an accepted part of a prudent, sustainable retirement plan.

Turning to slide 18 finance in the market as a leader in the reverse mortgage industry and has been the top producer in the wholesale channel for more than a decade.

Patty Cook: Turning to slide 18, Finance of America is a leader in the reverse mortgage industry and has been the top producer in the wholesale channel for more than a decade. The opportunity is to work with industry peers and partners to increase awareness of product benefits, leading to greater adoption. Therefore, we are focused on educating seniors on their opportunities in retirement, and we are well-positioned to make home equity an accepted part of a prudent, sustainable retirement plan. The opportunity in reverse is both sizable and under-penetrated. Current estimates show that senior citizens hold more than $8 trillion in home equity and that less than 2% of this addressable market has taken advantage of a reverse mortgage. As mentioned earlier, the secular tailwinds in reverse are tied to the increasing senior population, which is growing at 3% annually.

The opportunity is to work with industry peers and partners to increase awareness of product benefits leading to greater adoption. Therefore, we are focused on educating seniors on their opportunities in retirement, and we're well positioned to make home equity an accepted part of a prudent sustainable retirement plans.

The opportunity in reverse as both sizeable and Underpenetrated current estimates show that senior citizens hold more than eight trillion in home equity and that less than 2% of this addressable market has taken advantage of a reverse mortgage.

The opportunity in reverse is both sizable and under-penetrated. Current estimates show that senior citizens hold more than $8 trillion in home equity and that less than 2% of this addressable market has taken advantage of a reverse mortgage. As mentioned earlier, the secular tailwinds in reverse are tied to the increasing senior population, which is growing at 3% annually. Add to that the fact that 90% of seniors want to age in place, and it is clear this presents a substantial opportunity to create value for shareholders over time. I will now hand it back to Patty for closing remarks. Patty?

As mentioned earlier the SEC.

<unk> and reverse are tied to the increasing senior population, which is growing at 3% annually.

Add to that the fact that 90% of seniors want to age in place and it is clear this presents a substantial opportunity to create value for shareholders overtime.

Patty Cook: Add to that the fact that 90% of seniors want to age in place, and it is clear this presents a substantial opportunity to create value for shareholders over time. I will now hand it back to Patty for closing remarks. Patty?

I will now hand, it back to Patti for closing remarks Patti.

Thanks Graham.

Let me close by giving you an update of what we expect for the rest of the year.

Patty Cook: Thanks, Graham. Let me close by giving you an update of what we expect for the rest of the year. In Q1, I mentioned that we expected Adjusted EBITDA for 2021 to be roughly 20% lower than 2020. In Q2, we saw mortgage revenues decrease faster than expected, and despite a modest uptick in July, we now estimate a reduction in Adjusted EBITDA for full year 2021 of roughly 25 to 30%. Thank you, everyone, for your time and interest. As mentioned earlier, we believe our results this quarter reinforce the value of our diversified platform. As a public company, we remain focused on continuing to build shareholder value in everything we do. With that, we'll open up the call for questions. Operator, please.

Patricia Cook: Thanks, Graham. Let me close by giving you an update of what we expect for the rest of the year. In Q1, I mentioned that we expected Adjusted EBITDA for 2021 to be roughly 20% lower than 2020. In Q2, we saw mortgage revenues decrease faster than expected, and despite a modest uptick in July, we now estimate a reduction in Adjusted EBITDA for full year 2021 of roughly 25 to 30%.

In Q1, I mentioned that we expected adjusted EBITDA for 'twenty, one to be roughly 20% lower than 2020.

In Q2, we saw mortgage revenue decreased faster than expected and.

And despite a modest uptake in July we now estimate a reduction in adjusted EBITDA for full year 2021 of roughly 25% to 30%.

Thank you everyone for your time and interest as mentioned earlier, we believe our results this quarter reinforced the value of hard diversified platform.

Thank you, everyone, for your time and interest. As mentioned earlier, we believe our results this quarter reinforce the value of our diversified platform. As a public company, we remain focused on continuing to build shareholder value in everything we do. With that, we'll open up the call for questions. Operator, please.

As a public company, we remain focused on continuing to build shareholder value in everything we do.

With that we'll open up the call for questions operator please.

Thank you we will now begin the question and answer session.

Operator: Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star and then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. The first question comes from Doug Harter with Credit Suisse. Please go ahead.

[Operator 3]: Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star and then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. The first question comes from Doug Harter with Credit Suisse. Please go ahead.

To join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request.

If youre using a speakerphone please pick up your handset before pressing any keys.

To withdraw your question. Please press Star then two we will pause for a moment as callers join the queue.

The first question comes from Doug Harter with Credit Suisse. Please.

Please go ahead.

Thanks.

Good morning.

Doug Harter: Thanks, and good morning. Can you talk about the near-term growth outlook for commercial and reverse originations coming off kind of strong quarters? Where they can go from here?

Douglas Harter: Thanks, and good morning. Can you talk about the near-term growth outlook for commercial and reverse originations coming off kind of strong quarters? Where they can go from here?

Can you talk about the near term growth outlook for our commercial and reverse originations.

Coming off of kind of strong quarters, where they can go from here.

Yes.

Yes, good morning, Doug.

We're excited about the opportunity in both those channels. If you look at the tailwind that we described for repairs and for commercial they remain in place. So while it's hard to forecast the growth month to month or quarter to quarter. We believe we have a <unk>.

Patty Cook: Yeah, good morning, Doug. We're excited about the opportunity in both those channels. If you look at the tailwinds that we described for reverse and for commercial, they remain in place. So while it's hard to forecast the growth month to month or quarter to quarter, we believe we have a sustainable opportunity to grow those businesses.

Patricia Cook: Yeah, good morning, Doug. We're excited about the opportunity in both those channels. If you look at the tailwinds that we described for reverse and for commercial, they remain in place. So while it's hard to forecast the growth month to month or quarter to quarter, we believe we have a sustainable opportunity to grow those businesses.

<unk> opportunity to grow that business.

Yes.

Great.

It seems like the revenue margin in both of those channels.

Doug Harter: Great. It seems like the revenue margin in both of those channels was up sequentially in Q2. Just talk about the outlook for both of those revenue margins.

Douglas Harter: Great. It seems like the revenue margin in both of those channels was up sequentially in Q2. Just talk about the outlook for both of those revenue margins.

It was up.

Sequentially in the second quarter, and just talk about the outlook for both with Bose.

Revenue margins.

Yeah, I would answer it similarly, which is the dynamics that are in play in those markets are expected to continue its also.

Patty Cook: Yeah, I would answer similarly, which is the dynamics that are in play in those markets are expected to continue. There's always some variability in margin, but I would expect good margins to hold in both those channels.

Patricia Cook: Yeah, I would answer similarly, which is the dynamics that are in play in those markets are expected to continue. There's always some variability in margin, but I would expect good margins to hold in both those channels.

Always some variability in margin, but I would expect good margin to hold in both those channels.

Great. Thank you Dan.

Sure.

Doug Harter: Thank you, Patty.

Douglas Harter: Thank you, Patty.

Patty Cook: Sure.

Patricia Cook: Sure.

The next question comes from Stephen laws with Raymond James.

Operator: The next question comes from Stephen Laws with Raymond James. Please go ahead.

[Operator 3]: The next question comes from Stephen Laws with Raymond James. Please go ahead.

Please go ahead hi.

Good morning.

Stephen Laws: Hi. Good morning.

Stephen Laws: Hi. Good morning. Hi, Patty. To follow up on Doug's commercial question, when you think about the opportunities there, very hot, a number of companies reporting strength across those type loans. How do you think about growth opportunities there? Will it all be internal? I know you've done a number of acquisitions. Are there opportunities there to get into regions or maybe products that you don't have? What is the, I don't know. Other than internal growth, what are your thoughts around how to continue to increase volumes there?

And then conduct a question.

I'd like to follow up on Doug commercial question, you know when you think about the opportunities there very hot.

Doug Harter: Hi, Patty.

Stephen Laws: Hi, Patty. To follow up on Doug's commercial question, when you think about the opportunities there, very hot, a number of companies reporting strength across those type loans. How do you think about growth opportunities there? Will it all be internal? I know you've done a number of acquisitions. Are there opportunities there to get into regions or maybe products that you don't have? What is the, I don't know. Other than internal growth, what are your thoughts around how to continue to increase volumes there?

A number of published quoting strength across those type loans.

Do you think about growth opportunities there will it all be internal or are there I know you've done a number of acquisitions are there opportunities there to get into regions or maybe products that you don't have what is the.

I don't know.

Other than internal growth what is your thoughts around how to how to continue to increase volumes there.

Yeah.

I think as we look at the opportunity <unk> code as a competitive advantage of our I'll call. It piece about capital markets Group I think the opportunity for us to innovate in that sector is meaningful so.

Patty Cook: Yes. I think if we look at the opportunity, I'm going to go to the competitive advantage of our, I'll call it, bespoke capital markets group. I think the opportunity for us to innovate in that sector is meaningful. So if I were going to prioritize our own organic innovative growth versus acquisition, I'm going to lean into our own innovative growth through new product creation.

Patricia Cook: Yes. I think if we look at the opportunity, I'm going to go to the competitive advantage of our, I'll call it, bespoke capital markets group. I think the opportunity for us to innovate in that sector is meaningful. So if I were going to prioritize our own organic innovative growth versus acquisition, I'm going to lean into our own innovative growth through new product creation.

If I were going to prioritize our relative organic innovative growth versus acquisition.

Lean into our own innovative growth through new product creation.

Great and the switch to the forward segment I think you closed with maybe EBITDA down 25% to 30% I wanted to confirm that that's versus previous kind of thoughts around roughly 20.

Stephen Laws: Great. And to switch to the forward segment, I think you closed with maybe EBITDA down 25% to 30%. I wanted to confirm that that's versus previous kind of thoughts around roughly 20%. And then what drove the change? Was it more volume-related as you look at back-half originations and your thoughts around where mortgage rates might go? Or is it more margin outlook as you've seen a little bit of rebound, but maybe not a lot, and expect that, as you said, competition to remain pretty fierce there?

And then what drove the change was the was it more volume related as you look at back half originations in your thoughts around where mortgage rates might go or is it more margin outlook as you have seen a little bit of rebound, but maybe maybe not a lot and expect that as you said competition to remain pretty fierce there.

So first of all I'll confirm that your observation is correct that we're now talking about 25% to 30% down relative to 2020.

Patty Cook: So first of all, I'll confirm that your observation is correct. We're now talking about 25% to 30% down relative to 2020. And the guidance down is really a reflection of the dynamics we saw in the second quarter. Margins tightened faster than we expected them to. And even though we've seen a little bit of comeback in those margins in July and August, the outlook remains very uncertain in mortgage. So when we might get back to a more stable level is unclear. So we're going to take the second quarter and adjust our forecast based on that experience.

Patricia Cook: So first of all, I'll confirm that your observation is correct. We're now talking about 25% to 30% down relative to 2020. And the guidance down is really a reflection of the dynamics we saw in the second quarter. Margins tightened faster than we expected them to. And even though we've seen a little bit of comeback in those margins in July and August, the outlook remains very uncertain in mortgage. So when we might get back to a more stable level is unclear. So we're going to take the second quarter and adjust our forecast based on that experience.

And the guidance down is really a reflection of the dynamics, we saw in the second quarter.

Margins margins tighten faster than we expected them to and even though we've seen a little bit of come back give notice margins in July and August.

The outlook remains very uncertain, if mortgage so when we might get back to avoid a stable level is unclear. So we're going to take the second quarter and adjust our forecast based on that experience.

Great and then tied to that the expense side and maybe this is a better question for Johan.

Stephen Laws: Great. Then tying to the expense side, and maybe this is a better question for Johan, but even if I remove the $43 million, the comp and benefits maybe didn't drop quite as much as I would have expected given the volumes and margins. I mean, can you talk about how variable comp is based? Is that volume-driven? Is it profit-driven on margins? And then as you look longer term, is there an expense side to the equation of benefiting margins? I mean, does the industry need to contract and reduce the number of origination people? Kind of what are your thoughts on longer-term operating expense run rate in a declining refi world?

Even if I remove the 43 million.

Comp and benefits, maybe didn't drop quite as much as out of expected given the.

The volumes and margins I mean can you talk about how variable comp as base as that volume driven is it profit driven on margins.

And then as you look longer term.

You know what what is is there an expense sides of the equation of it benefiting margins I mean does the industry need to contract and reduce the number of origination people kind of what are your thoughts on longer term operating expense run rate.

And declining refi world.

So first of all on variable comp variable comp is pretty much directly tied to volume.

Patty Cook: So first of all, on variable comp, variable comp is pretty much directly tied to volume. So the amount we're paying our LOs isn't changing. Variable comp, on average, is going to go up and down with volume. I think on cost-cutting, and I'm going to let Graham take this when I make a couple of quick observations. So if you look at what happened in the second quarter, the first thing you do when volumes come down is you cut your overtime because part of the way you flex up during periods of high volume is through overtime. So the first thing you do is you cut back on the overtime. Then you need to adjust for some stable level of originations going forward, and you can begin to look at some of your fixed costs.

Patricia Cook: So first of all, on variable comp, variable comp is pretty much directly tied to volume. So the amount we're paying our LOs isn't changing. Variable comp, on average, is going to go up and down with volume. I think on cost-cutting, and I'm going to let Graham take this when I make a couple of quick observations. So if you look at what happened in the second quarter, the first thing you do when volumes come down is you cut your overtime because part of the way you flex up during periods of high volume is through overtime. So the first thing you do is you cut back on the overtime.

The amount, we're paying our Elba island and changing variable comp on average is going to go up and down with volume.

Think on cost cutting and I'm going to let Graham.

Take this when I make a couple of GAAP to a couple of quick observations. So if you look at what happened in the first cohort in the second quarter.

The first thing you do when volumes come down in <unk>.

Cut your overtime.

Because part of the way and flex up during periods of high volume is through overtime. So the first thing you do is you cut back on the overtime.

Then in each which creates some stable level of originations going forward and you can begin to look at some of your fixed cost.

Then you need to adjust for some stable level of originations going forward, and you can begin to look at some of your fixed costs. I think we do a really good job in each one of the channels at trying to balance the outlook against the near-term volume. I don't expect you to see a huge change, an expense reduction in mortgage in particular over the remainder of the year. Graham, would you add anything to that?

I think we to a really good job in each one of the channels and trying to balance the outlook against the near term.

Patty Cook: I think we do a really good job in each one of the channels at trying to balance the outlook against the near-term volume. I don't expect you to see a huge change, an expense reduction in mortgage in particular over the remainder of the year. Graham, would you add anything to that?

Volume I don't expect you to see a huge change in expense reduction and mortgage in particular over the remainder of the year.

Graeme would you add anything to that.

Yes, I would add a couple of things, Steve and good morning.

Doug Harter: Yeah, I would add a couple of things to Stephen. Good morning. So over the course of the quarter, we did have some reductions in our call center. And we are also, as Johan pointed out, right? We had some elevated expenses in wholesale with the acquisition of Parkside Lending. We did have some reductions there in July, and we're continuing to evaluate the size of that wholesale group relative to the volume. So it's an ongoing initiative, but it really is segment by segment and channel by channel, right? But we're keenly focused on the expenses in each of those channels to make sure that all of them are right-sized and contributing the right amount of profitability to the bottom line.

Graham Fleming: Yeah, I would add a couple of things to Stephen. Good morning. So over the course of the quarter, we did have some reductions in our call center. And we are also, as Johan pointed out, right? We had some elevated expenses in wholesale with the acquisition of Parkside Lending. We did have some reductions there in July, and we're continuing to evaluate the size of that wholesale group relative to the volume.

So over the course of the quarter. We did we did have some reductions in our call Center and we are also as Johan pointed out right. We had some elevated expenses in wholesale with.

With the acquisition of Parkside lending.

We did have some reductions there in July and we're continuing to evaluate.

Just the size of that wholesale group relative relative to the volume so it's.

It's an ongoing initiative.

So it's an ongoing initiative, but it really is segment by segment and channel by channel, right? But we're keenly focused on the expenses in each of those channels to make sure that all of them are right-sized and contributing the right amount of profitability to the bottom line.

But it really is segment by segment and channel by channel right, but we're keenly focused on.

The expenses in each of those channels to make sure that all of them are right sized and contributing.

The right amount of profitability to the bottom line.

I appreciate both of your comments on that I know one of the others in the space kind of an announcement of a variable cost reduction.

Stephen Laws: Great. I appreciate both your comments on that. I know one of the others in the space kind of had an announcement of variable comp reduction. Last question for me. I want to touch on stock buyback. I know the last time we spoke on this call, it was stock was a little higher, also had less float, and it was an unlikely scenario. Given the expiration of the lockup on the PIPE shares, the float is up, I think, 13%, at least with those shares unlocking. The stocks come under pressure. Can you update us on your thoughts around a stock repurchase when you look at where shares are trading today?

Last question for me I wanted to touch on stock buyback I know the last time, we spoke on this call. It was.

Stock was a little higher also had less float and it was an unlikely scenario given the exploration of the lockup on the pipe shares.

Is up I think 13% at least with those shares are marking the stock's come under pressure.

Update us on your thoughts around the stock repurchase when you look at where.

Where shares are trading today.

Yeah, Stephen I will.

As we look at our capital management and capital deployment. There are always a variety of considerations that are going to weigh into that decision.

Patty Cook: Yes, Stephen, I will. So as we look at our capital management and capital deployment, there are always a variety of considerations that are going to weigh into that decision. But as Johan mentioned in his prepared remarks, we will continue to look at making investments in the business that reduce the cyclicality of our earnings and remain focused on maximizing shareholder value over time.

Patricia Cook: Yes, Stephen, I will. So as we look at our capital management and capital deployment, there are always a variety of considerations that are going to weigh into that decision. But as Johan mentioned in his prepared remarks, we will continue to look at making investments in the business that reduce the cyclicality of our earnings and remain focused on maximizing shareholder value over time.

But and Johan measure mentioned in his prepared remarks, we will continue to look at making investments in the business that reduce the cyclicality of our earnings and we remained focused on maximizing shareholder value over time.

Okay, well look forward to those announcements.

Stephen Laws: Okay. Well, I look forward to those announcements, and good to see the strong growth in reverse in commercial this quarter. So both were above what I was looking for. Thanks for your time today.

Good to see the strong growth in reverse in commercial this quarter. So both were above what I was looking for thanks for your time today.

Yes, Thanks for you Ed.

Patty Cook: Yeah, thanks for yours.

Patricia Cook: Yeah, thanks for yours.

Once again, if you have a question. Please press Star then one.

Operator: Once again, if you have a question, please press star, then one. The next question comes from Lee Cooperman with Omega Family Office. Please go ahead.

[Operator 3]: Once again, if you have a question, please press star, then one. The next question comes from Lee Cooperman with Omega Family Office. Please go ahead.

The next question comes from Lee Cooperman with Omega family Office.

Please go ahead.

Thank you good morning, and congratulations on your first conference call or second I guess, it kind of disclose a public company.

Lee Cooperman: Thank you. Good morning, and congratulations on your first conference call or second, I guess, conference call as a public company. Just three questions. One, which measure of book value does management think is most indicative of value of the company? Tangible is about 2, and stated book value is about 12. That's question one. Second, can you put an EPS number around your guidance regarding the EBITDA margin you talked about? And finally, in terms of the earnings, how much of the earnings you're generating represents free cash flow, and your priorities for the use? Which I think in the last question you implied the priorities were to kind of do tuck-in acquisitions, but I'd like to kind of explore that a little bit more. Those three questions, if you wouldn't mind.

Leon Cooperman: Thank you. Good morning, and congratulations on your first conference call or second, I guess, conference call as a public company. Just three questions. One, which measure of book value does management think is most indicative of value of the company? Tangible is about 2, and stated book value is about 12. That's question one. Second, can you put an EPS number around your guidance regarding the EBITDA margin you talked about?

Just three questions, one which measure of book value does management think is most indicative of value of the company Tangibles about two stated book value it's about 12.

Question. One second can you put an EPS number around are you your guidance regarding the EBITDA margin you talked about.

And finally in terms of the earnings how much of the earnings you're generating represents free cash flow and your priorities for the use which I think in the last question you implied.

And finally, in terms of the earnings, how much of the earnings you're generating represents free cash flow, and your priorities for the use? Which I think in the last question you implied the priorities were to kind of do tuck-in acquisitions, but I'd like to kind of explore that a little bit more. Those three questions, if you wouldn't mind.

The orders were to kind of do tuck in acquisitions, but I'd like to kind of explore that a little bit more those three questions. If you would mode.

Alright.

Yeah. Thanks, good morning.

Patty Cook: Yohan?

Johan Gericke: Yeah, yeah. Thanks. Good morning, Lee.

Good morning.

Lee Cooperman: Good morning.

So.

We look at the business on the first question.

Johan Gericke: Good morning. So we look at the business on the first question across a number of dynamics. Obviously, book value, tangible book value are all very important for us, as well as the desired level of capital that we need to continue to, as Patty mentioned, drive investments that can avoid the cyclical nature of the earnings. But I would say, at the end of the day, as the market looks at tangible book value, that's probably the most important metric.

Across a number of dynamics, obviously book value tangible book value are all very important for us.

As well as.

The desired level of capital that we need to continue to to as Patti mentioned.

Drive.

Investments that can avoid the cyclicality cyclical nature of the earnings.

But I would say at the end of the day.

As the market looks at.

Book value, that's probably the most important metric.

Yeah, I would add to that since we are not an asset heavy company I think book value is more relevant.

Patty Cook: Yeah. I would add to that, since we are not an asset-heavy company, I think book value is more relevant to us than someone that might be carrying a big balance sheet. But nonetheless, we've got to consider both as we look at managing the overall balance sheet, the income statement, and the strategic imperatives of the business.

Patricia Cook: Yeah. I would add to that, since we are not an asset-heavy company, I think book value is more relevant to us than someone that might be carrying a big balance sheet. But nonetheless, we've got to consider both as we look at managing the overall balance sheet, the income statement, and the strategic imperatives of the business.

And someone that might be carrying a big balance sheets, but nonetheless, we've got to consider both as we look at managing the overall balance sheet income statement and the strategic imperative for the business.

To be honest, we wish behind the question is clearly if you're looking at tangible book value as being important you are unlikely to be buying stock back.

Lee Cooperman: Well, to be honest, what's behind the question is clearly, if you're looking at Tangible Book Value as being important, you're unlikely to be buying stock back at 6 and change because you're diluting Tangible Book Value. On the other hand, you're adding to your gross book value, stated book value of 12. But anyway, the second question, is it an EPS number that you have in mind that you could share with the group?

Leon Cooperman: Well, to be honest, what's behind the question is clearly, if you're looking at Tangible Book Value as being important, you're unlikely to be buying stock back at 6 and change because you're diluting Tangible Book Value. On the other hand, you're adding to your gross book value, stated book value of 12. But anyway, the second question, is it an EPS number that you have in mind that you could share with the group?

Six and change.

We should diluting tangible book value on the other hand, you're adding to your gross book value state of book value of 12.

Yeah.

But anyway. The second question is it EPS number you have in mind that you could share with the group.

No at this point, we're not giving a guidance on the EPS.

Patty Cook: No. At this point, we're not giving a guidance on the EPS.

Patricia Cook: No. At this point, we're not giving a guidance on the EPS.

Okay. So my math tells me a Buck 70. This year you want to comment on that pair estimate.

Lee Cooperman: Okay. So my man tells me $1.70 this year. You want to comment on that, our estimate?

Leon Cooperman: Okay. So my man tells me $1.70 this year. You want to comment on that, our estimate?

No actually Lee I don't.

Patty Cook: No, actually, Lee, I don't.

Patricia Cook: No, actually, Lee, I don't.

Okay.

And lastly, free cash flow and priorities for us.

Lee Cooperman: Okay. Lastly, free cash flow and priorities for use. What's behind it? I understand that you guys make it very clear, and I'm not really debating you, that you would rather do a tuck-in acquisition and buy back your own stock. If the gross book value of $12 is indicative of value, I noticed that two analysts that cover the company. One is $12, has a $12 price objective. Another one is a $13.5 price objective. So if you use a lower objective, it's almost twice the current stock price. Do you believe these tuck-in acquisitions will create more value than buying back your own stock at half of what other people think it's worth?

Leon Cooperman: Okay. Lastly, free cash flow and priorities for use. What's behind it? I understand that you guys make it very clear, and I'm not really debating you, that you would rather do a tuck-in acquisition and buy back your own stock. If the gross book value of $12 is indicative of value, I noticed that two analysts that cover the company. One is $12, has a $12 price objective. Another one is a $13.5 price objective. So if you use a lower objective, it's almost twice the current stock price. Do you believe these tuck-in acquisitions will create more value than buying back your own stock at half of what other people think it's worth?

And then really what's behind it I understand that you you guys make it very clear that and I'm not really debating you that you would rather do a tuck in acquisition and buyback your own stock.

If the gross book value of 12 is indicative value I noticed the two analysts that cover the company. What is 12. So it has a 12 plus objective and the other one is the <unk> price objective. So if you use a lower objective is almost twice the current stock price do you believe these tuck in acquisitions will create more value.

Buying back your stock at half of what other people think its worth.

I think for a long period of time smart strategic investments that will continue to improve.

Patty Cook: I think over a long period of time, smart, strategic investments that will continue to improve, I'll say, the non-cyclicality of our earnings are the right answer.

Patricia Cook: I think over a long period of time, smart, strategic investments that will continue to improve, I'll say, the non-cyclicality of our earnings are the right answer.

Hey, Dave not cyclicality of our earnings to the right answer.

Mhm well.

Well I congratulate you guys going public at the top of the market you quote you quite a cup congratulations.

Lee Cooperman: Well, I congratulate you guys going public at the top of the market. You caught the top. Congratulations.

Leon Cooperman: Well, I congratulate you guys going public at the top of the market. You caught the top. Congratulations.

Thanks Lee.

Eric from you.

Patty Cook: Thanks, Lee. Always good to hear from you.

Patricia Cook: Thanks, Lee. Always good to hear from you.

Yes.

There are no further questions on the phone lines and this concludes the question and answer session.

Operator: There are no further questions on the phone lines, and this concludes the question and answer session.

[Operator 3]: There are no further questions on the phone lines, and this concludes the question and answer session.

Thank you everybody for joining the call. We appreciate your time and attention and look forward to seeing you again next quarter. Thank you.

Patty Cook: Thank you, everybody, for joining the call. We appreciate your time and attention and look forward to seeing you again next quarter. Thank you.

Patricia Cook: Thank you, everybody, for joining the call. We appreciate your time and attention and look forward to seeing you again next quarter. Thank you.

Okay.

Yeah.

[music].

Okay.

Yes.

Okay.

[music].

Okay.

Yeah.

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