Q4 2021 Sunlight Financial Holdings Inc Earnings Call
[music].
Thank you for standing by this isn't a conference operator welcome to the Sun life financial full year 2021 earnings conference call.
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I would now like to turn the conference over to Louise Lucia Dempsey head of Investor Relations. Please go ahead.
Good afternoon, and welcome to Sun life Financial's full year 2021 earnings call.
After the close of the market today, we announced fourth quarter and full year 2021 financial results and posted an earnings presentation to our Investor Relations website IR docs on my financial Dot Com.
Before we begin I'd like to remind everyone that this webcast may contain certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These include remarks about future expectations beliefs estimates plans and prospects.
Such statements are subject to a variety of risks uncertainties and other factors that could cause actual results to differ materially from those indicated or implied by such statements.
Looking statements include but are not limited to Sun life, financial's expectation or predictions of financial and business performance and conditions and competitive and industry outlooks.
Forward looking statements speak as of the day. They are made and are subject to risks uncertainties and assumptions and are not guarantees of performance.
In my financial is under no obligation and expressly disclaims any obligation to update alter or otherwise revise any forward looking statements, whether as a result of new information future events or otherwise except as required by law.
The company also refers participants on this call to the press release issued by the company and filed today with the SEC.
The supplemental presentation closer to Sun life, Financial's website, and select financials and SEC filings for a discussion of the risks that can affect our business.
Additionally, on today's call, we will discuss non-GAAP measures, which we believe can be useful in evaluating our performance.
The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP.
A reconciliation of these non-GAAP measures to their most directly comparable GAAP measures can be found in both our press release and the supplemental presentation.
Joining me today are not metairie somewhat financials, Chief Executive Officer, and Barry Edinburg, Chief Financial Officer.
That will start with key highlights for 2021 and then Barry will provide additional detail on our fourth quarter and full year results.
Matt will then provide our 2022 outlook and a quick recap of how do we drive value for all stakeholders.
Following these prepared remarks, we will open the call to Q&A.
It is now my pleasure to turn the call over to Matt Metairie.
Thank you Alicia good afternoon, everyone and thank you for joining us today.
I'm pleased to report outstanding fourth quarter and full year 2021 results.
Unlike funded $638 million of solar and home improvement loans in the fourth quarter.
Adding to our full year total up to $5 billion up 72% from the prior year.
Revenue for the year was $121 million at the top end of our guidance range, which we provided in August of 2021, driven by record high total revenue of $37 million in the fourth quarter.
Both full year, adjusted EBITDA of $53 million and adjusted EBITDA margin of 44% exceeded the top end of our guidance range as well.
These results are a testament to our strong relationships with both contractors and capital providers, leading to strong year over year growth. Despite a more challenging macro environment 2021 was a pivotal year for somebody operationally as well as we demonstrated growth and success in a number of areas our average law.
Balances continued to increase with full year 2021, solar loans, averaging over $40000 and even up to $42000 in the fourth quarter rollout.
We ended the year with a 22% battery attachment rate up from only 13, 1% in 2020.
Well, so much battery attachment rate will fluctuate quarter to quarter based on install or distributions equipment availability and other factors. We believe that battery storage will continue to provide increasing benefits to homeowners over time and that our battery attachment rates will continue to increase in the coming years as a result.
Now we're also pleased to have ended the year with more than 1500 active contractors.
40% increase over year end 2020.
This was primarily driven by rapid growth of our home improvement contractor network as we continue to build out that business and supported by continued expansion of our solar contractor now.
I'll now turn it over to Barry to discuss our financial accomplishments in more detail.
Thanks, Matt as.
As mentioned earlier somebody generated $37 million of total revenue in the fourth quarter of 2021.
27% increase over the fourth quarter of 2020, and new quarterly high for the business. This led to full year total revenue in 2021 of $121 million meeting the top end of our guidance range and representing a 73% increase over the prior year.
Full year, adjusted EBITDA of $53 million exceeded guidance and was up 121% from full year 2020, driven by record high adjusted EBITDA of $18 $5 million in the fourth quarter of 2021 alone.
Adjusted EBITDA margin was also up materially from 34, 4% for full year 2020 to 43, 9% and full year 2021.
As discussed on previous calls in the second quarter of 2021, we leveraged our strong partnerships with capital providers and the relative attractiveness of sunlight loans to improve pricing with certain capital providers. This effort resulted in a rapidly increasing platform fee percentage in the second half of the year.
Our direct channel solar platform fee percentage in the fourth quarter was five 7%.
Up from four 3% in the second quarter.
Our total platform fee percentage in the fourth quarter was five 3% up from 4.0% in the second quarter.
The full year came in at four 4% of the total business and five 1% the solar direct channel business.
Our ability to execute on margin has always been driven by our funding strategy, our industry, leading credit quality and the long term nature of our partnerships.
We had three new capital providers in 2021 and in the fourth quarter. We were pleased to establish a direct channel capital provider for home improvement months, enabling us to record some home improvement platform fees and revenue and are at a higher margin than in the indirect channel.
I also expect to continue adding capital providers in the coming quarters in order to expand access to low cost funding and enhanced platform stability in various market conditions. In addition to maintaining access to attractive capital with which to fund loans. So that itself is very well capitalized in terms of adjusted EBITDA into free cash flow at a high rate.
We ended the year with nearly $92 million of cash on the balance sheet and we generated significant free cash flow in 2021.
While we will be focused on maintaining adequate liquidity in the business plan to be strategic and deploying cash as Matt will discuss later in more detail.
Before I turn it back to Matt I'd like to speak on a more personal note.
As this is my last earnings call with Sun life financial.
Announced this afternoon, I've decided to step down as Chief financial officer of the company.
In order to support a seamless transition however, I have agreed to serve as an adviser to the business through the end of the third quarter.
I have thoroughly enjoyed my time at some way over the last six years and I'm proud of what we've collectively built.
I really appreciate the partnership with Matt and all of my teammates at Sun Life and believe that we've established a unique platform, whose capital light cash generating financing model will continue to drive success for the business in the coming years.
I know the company is in good hands and I look forward to following the continued success of Sun life financial in the future.
Thanks Paresh.
It's been an absolute pleasure building this company with you and will Miss the value you brought to our business every day.
The board and all of our sub my teammates I want to thank you for the integral role you played and wish you all the best in your future endeavors.
Now as we also announced this afternoon Rodney Yoder has been appointed Chief Financial Officer effective April 1st I've had the pleasure of working with Rodney at both N DNA and Swift financial.
He is a seasoned finance executive with significant experience in financial analysis, consumer credit M&A and strategic decision, making.
And I'm pleased to welcome Rodney to the team and I look forward to the value of who bring us as we tackle our next phase of growth now.
Now as I've mentioned earlier somebody has achieved outstanding results. Despite challenges in the macro industry environment, though some of these challenges have continued into 2022, we remain well positioned to perform effectively particularly relative to our peers.
But first I'd like to touch on Covid related impacts.
I'm a crime variant that spiked between December and January aggravated normal seasonality trends with lower credit approvals and funded by <unk>.
However, we've already seen signs of recovery and we expect to resume to normal seasonality in the second quarter of this year.
The second is supply chain labor and permitting.
As we've mentioned on prior calls these issues impacted pull through rates and funded volume in the second half of 2021 leading to funded volume approximately 10% lower for the full year than we otherwise would have expected.
We expect these issues to persist in the near term, it's a slowly normalize through the course of 2022.
The third is inflation, while rising prices are impacting our economy and a number of ways. The effect on sunlight is more muted for two reasons.
First stomach does not directly their installation costs, such as materials or labor.
And secondly power prices are expected to increase at a higher rate than the price of solar installation, which further enhances the residential solar value proposition.
The fourth item is interest rate volatility.
We intentionally choose to be primarily funded by depository institutions, which leads to less volatility in our funding costs, even in a rising rate environment for.
For example, although the five year swap rate has increased over 100 basis points since our last earnings call, creating what we believe to be an approximate a b S execution difference of more than five points, we have not yet seen any deterioration in pricing with our depository partners.
As said, we do anticipate that rising rates may have some impact, particularly on our indirect channel.
Lastly, the regulatory environment.
While final outcomes are uncertain for an ITC extension and for updated steep net metering legislation. We believe support for increased renewable energy, particularly solar remains strong at the federal and state levels with these macro factors in mind as we forecast our performance in solar and home improvement for the year.
I'm pleased to initiate some nice 2022 full year guidance ranges for the following metrics.
Total funded loan volume up 2.9 to $3 $1 billion.
Total revenue of $145 million to $155 million, and adjusted EBITDA up $55 million to $60 million.
Our guidance highlights the continued growth of our business with the midpoint of the total revenue guidance for example, representing 24% growth year over year we.
We expect slightly lower growth in adjusted EBITDA to account for the full year impact of increased costs related to being a public company as we've discussed on prior calls we.
We have also decided to provide funded volume guidance for the first quarter of 2022, which we expect to be between 580 $590 million, we do not intend to regularly provide quarterly volume guidance, but we feel it's useful this quarter given the timing of this earnings call and the residual impacts of slow.
Our pull through rates and omicron on first quarter funded volume in.
In addition to providing guidance on specific metrics I'd like to share how we strategically think about capital deployment.
We continue to profitably operate a capital light cash generative business.
Our current primary use of capital is our contractor advance this program.
There, we provide contractors with working capital for sunlight financing so installations.
We have found this to be a highly effective tool for strengthening relationships and growing volume with existing contractor partners.
We invested more than $30 million to the program in 2020 one in the form of higher advance balances and the program was a material factor in signing significant contract commitments for 2022.
We will continue to allocate capital to this program Opportunistically to further deepen relationships and increased volume and market share.
Outside of that we expect to strategically use capital toward bolt on M&A and to return value to shareholders.
We're continually evaluating acquisition opportunities to enhance our value proposition or to provide opportunities to apply our unique capabilities in adjacent verticals.
They also consider opportunities to build long term investor support by returning capital to shareholders, particularly in periods of prolonged undervaluation.
We will continue to work with our board to evaluate the best investment opportunities and we will share more on future earnings calls.
Now before turning to Q&A, particularly for those of you who are newer to sunlight.
I wanted to take a moment to walk you through how the company drive success and how we're building the premier clean energy focused point of sale finance platform.
Now as I've described on prior calls there were three key pillars that are crucial for the success of finance platforms.
Access to distribution effective risk management and access to diverse and low cost capital for.
The first pillar access to distribution.
<unk> network of over 1500, solar and home improvement contractors efficiently provide sunlight with volume nationwide.
Contractors are attracted to sunlight, thanks to our proprietary point of sale platform, which we call orange.
Our innovative products such as our new 30 year solar alone in our ability to provide contractors with advances.
This has led to securing contracts or commitments of over $1 $5 billion in potential funded loans in 2022.
The second pillar credit risk management has been the core of some nice success from the beginning.
Our management team has significant through the cycle credit experience, having spent the last few decades building consumer credit businesses at a variety of firms.
We've also been Iterating on our credit strategy since the start of summer, which has played a key role in developing our industry leading credit quality.
We also have recently implemented credit strategy five point out which reflects a fully refreshed methodology and is expected to further increase our approval rates without increasing loss rates.
This approach has allowed us to originate the highest credit quality solar loans in the industry.
Third pillar stable and low cost funding reflects our decision to fund our loans by building deep partnerships with depository institutions that provide low cost reliable and long term capital.
By treating these funding sources as long term partners, we remain dedicated to their success and we build mutually beneficial relationships.
We will continue to add capital providers to address demand and to build diversity, but we're also proud that our capital provider can image a more than sufficient to meet our expected 2022 funded by.
And as I mentioned earlier, we believe that funding with the depository institutions represents a competitive advantage in the current environment as they reduce our exposure to interest rate volatility relative to our peers.
Executing on each of these three pillars creates a virtuous cycle for something where success with contractors.
Value for homeowners, which drives attractive returns for capital providers, which in turn drives increased capital for contractors.
Now, we believe sunlight unique attributes create a compelling long term value for shareholders.
It's focused on two very attractive markets residential solar and home improvement and both of these markets are growing rapidly driving significant demand for our best in class financing.
And even with increased competition the market provides sufficient room for growth of volume and market share.
Additionally, our point of sale technology platform.
Orange enable scalability and serves as a competitive advantage through over six years of consistent iteration, we've created a powerful technology platform for assessing credit for processing loan products and driving increased sales for our contractors and installers.
In addition to winning contracted relationships Orange allows somebody to scale efficiently and deliver significant operating leverage and could also allow us to expand to attractive adjacent verticals and as we've mentioned several times our capital light balance sheet enables us to drive growth with minimal direct credit risk exposure.
Yeah.
Lastly, we are solidly profitable business with strong cash flow generation two.
2021 reflects our third year of recording positive adjusted EBITDA and we continue to convert adjusted EBIT to free cash flow at a higher rate.
We expect to maintain this trajectory through 2022, and we'll continue to deploy capital to support the long term growth and success of the company.
With that I'd like to turn it over to the operator.
Thank you well now begin the question and answer session to.
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Our first question is from Aaron There'd be no pitch with Citi. Please go ahead.
Thanks.
The the growth forecast that you have for the year.
I was wondering if you could talk a little bit about the confidence.
<unk> growth looked like kind of <unk>.
Flattish.
Explained away by supply chain, and I'm, a crown, which makes sense, but you're implying a decent pickup in growth. What gives you the confidence that you won't have the same kind of.
Supply chain type of issues in the latter half of the year.
Yeah. Thanks, Thanks for the question Eric.
So first I think we set out guidance last year, and we met and exceeded the high end of that of that guidance and as we said our guidance. This year. We took into account. The fact that there are supply chain challenges that we've talked about before the labor challenges as well.
Well as permitting and we do expect some of those to persist.
Enter into the year.
That said seasonally we typically see each quarter sequentially growing.
And we continue to have confidence that we'll be able to hit the projections that we're laying out here and they're taking into account some of those macro factors that we that we've talked about.
Oh, I'm, sorry, [laughter] microphone.
The Uh huh.
The direct channel versus the indirect channel for for funded loans.
In my mind, I always think of the indirect channel is kind of.
More akin to the ABS market are pulling for the ABS market.
You know what are the commitments.
On each of those and.
What are the.
What are they that those commitments are they are they hard commitment and what kind of timeframe.
It is remaining on this commitment.
Yeah. Thanks for the question.
We have various levels of commitments on both sides of our business the direct channel side and the indirect channel side.
On the direct channel side, it's mostly depository partners that really are focused on market execution. They are found themselves with deposits and we've got to take advantage of that sort of low cost capital on the indirect side, we have relationships with others that are more market focused but those are negotiated relationships so pricing.
It was negotiated.
And we havent various our relationships with various tenants that left different amounts of time. So there is no real consistent Janet Aaron.
From one to the other but feel really good about the commitments we have in place.
And don't expect any issues and funding loans in 2022 or beyond that for that matter.
Okay. Thank you.
The next question is from Chris Donat with Piper Sandler. Please go ahead.
Hi, good afternoon, everyone.
Best wishes to Berry.
What comes next.
Wanted to ask about the 2022 guidance for the implied fee margin, which looks like about 5% at the midpoint.
Just wondering if you expect some downward pressure on that from the mix of home improvement.
And solar like an increasing mix of home improvement or are there other factors that might put some downward pressure on on the fee margin from where we were in the fourth quarter.
Yeah.
Thanks for the thoughts Chris I appreciate that question.
So overall, we expect that 2020, a platform fee percentage to exceed that of 2020 full year number for 'twenty, one full year number.
Any of the improvements we saw come through in the second half of the year will continue into 2022.
I would note that all the factors that you mentioned, whether it be market or home improvement a percentage of our business all of those things were taken into account in our forecast and our guidance.
But I think it's important to give context on the platform fee percentage and how do we think about it going forward.
First our margins are going to have some normal variability quarter to quarter.
Due to product and installer mix capital provider mix and the competitive environment. So we shouldn't expect margins to be perfectly consistent quarter to quarter.
Second the fourth quarter of 2020 was <unk> 21 was definitely a high watermark.
For several reasons and we don't expect margins to continue in 2022 at that level.
Third while we think that we're relatively well positioned or we are relatively well positioned in a rising rate environment relative to those of our peers that are relying on the capital markets. It's likely that we'll see some impact from rates, especially in our indirect channel.
So we feel good about the forecast we feel good about how we're thinking about margins.
But you know I think all of that context is really important.
Okay.
Got it that all makes sense to me and then in terms of the number of contractors that you show on slide 11.
The slide deck.
The number of solar contractors ticked down to 762 should.
Should we be concerned about that or I know not all contractors are created equal. So just just want to understand what's the dynamic there and if that's something worth paying attention to going forward.
Yeah. Thanks, Chris.
So we always report this number because we think it's.
And an indicator of the business, but we as we said before we don't think the absolute number of contractors is as important as the quality of the relationships that we have and the numbers will bounce around a little bit in the fourth quarter, we saw a little bit of a dip in on solar and seek and saw continued growth in our at home improvement, Although we were up significantly year.
Over a year.
Toward the end of the year, what we really did was focus our efforts on locking up deeper relationships with our contractors and so we were able to gain commitments that we think will equal about 1 billion and a half dollars worth of volume in 2022, and so that's where we focused our efforts.
Effectively flat in solar and good growth in home improvement and as I as I look out I'd say I'd expect us to continue to have some have some growth, but they'll they'll always be a little bit of quarterly noise in there.
Okay, Yeah, I guess, we haven't seen any quarterly noise at least for the last couple of years, but.
It would seem not surprising and then just last question for me on the in.
In the financials to the goodwill impairment.
Any comment there on what what that was and what caused it.
Yeah absolutely.
So we are you know we put a significant amount of goodwill on the balance sheet in the context of.
The business combination that we went through last year.
The purchase price accounting required it.
We posted about a $670 million a chunk of goodwill.
The test that for impairment on an annual basis and in some circumstances more frequently than that as part of our testing in the fourth quarter of 2021, we wrote down the value of goodwill by about $225 million.
And that impairment was driven primarily by a market based analysis of companies similar to sunlight not anything relating to the operations of the company. So my perspective is.
From an operation standpoint, but obviously theres a decent sized accounting get back there.
Got it right, but nothing that would.
Affect cash flow or adjusted EBITDA or anything like that.
All noncash nothing nothing that affects any of those things.
Got it alright.
Thanks, very much gentlemen.
Sure. Thank you.
The next question is from Philip Shen with Roth Capital Partners. Please go ahead.
Thanks for taking the questions Barry.
I'll Echo the same sentiment will miss working with you.
Was wondering if you might be able to share.
Some color as to the decision.
To move on you know what why at this point you know you've been with the company six years.
You just public now there's.
So much more to build and grow.
What oh, what's taking away from the business.
Sure I appreciate the thoughts on that and the question Phil. So I mean, you really set up when you said I've been with the company six years I joined the company as CFO almost six years ago. When the company was effectively a startup.
Raised several rounds of capital we've built the financing capital markets functions effectively from scratch.
Further business into one with $121 million of total revenue in 2021, and we listed the company on the New York Stock Exchange last year as you just said.
I'm really proud of the partnership with bat and all my teammates it sounds like but I think it's really an appropriate time for me to take a step back and it's completely natural at this point to bring in some new leadership to the company.
Drive the next phase of growth.
I think as we said in the release and the remarks I'll stay on as an advisor for at least the next couple of quarters to make sure the transition as I said with one.
<unk>.
Yeah, that's that's pretty much the size of it.
Is that a is that it's time to make this make this change.
Okay, well, we'll Miss you again, and we'll look forward to working with Rodney.
Shifting over to the.
Volume, so and the Q1 guide.
Get the guide is flat year over year.
And.
And flattish anyway, and you know some of the other public peers our COO.
No the.
I think they're guiding for up picking up a 100% year over year runs gobbling up 15% year over year.
You guys talked about it being all market driven I notice so just wondering.
Oh, what else might there be from industry dynamic standpoint.
Hum.
Contrary to growth as you guys just highlighted.
It was a little bit down.
Is there something else that you might be able to share.
That might help explain why the year over year growth might be flat.
Yeah. So I think you know.
Well first of all if you look at the full year 2021 obviously up substantially over over 2020, and if you look at the mid point of our of our guidance for 2022 revenue for instance, up in the mid 20% range.
So you know we're continuing to show continue to show growth and steady guidance numbers out there that we that we felt confident in.
I look at the when we look at the first quarter.
And we've talked about these macro these macro issues.
We do yeah.
We continue to expect them to persist into the first quarter.
The other effect.
Which happened at the end of the ended the year and into the front part of the first quarter was across and that impacts both credit approvals at the top of the funnel and then also in tax funded loans.
So because we saw that impact, we're giving we're giving guidance for where we are in the first quarter, but as I mentioned earlier, we continue to expect sequential growth quarter over quarter.
Growth over the full year.
Okay.
The year over year growth is definitely good.
And then from a contract or a growth standpoint, I know, we just talked about it a touch but.
How much do you think that contractor number to grow in 'twenty two.
<unk> versus year end 'twenty one.
Yeah. So we don't we don't set.
Public targets as it relates to the contractor growth and we really are focused on the quality of it.
We've said in the past and we continue to believe that it's important to share. This number because we know that the the market investors are interested in the overall number.
But yes, you can absolutely target. The goal is not to hit an absolute number of contractors. The goal is to drive profitable growth.
And that's really what we're focused on so I do expect we'll see growth in 2022.
Well see that as we look out but you know if I look back to last quarter I'm confident we made the right decision by focusing on deepening those relationships rather than chasing a number to make to make the page look good first is developing deep long term relationships and where we're focused on those deep long term relationships.
Okay. Thanks, Matt and then in terms of the sunlight Max program for the non prime solar.
Home efficiency.
Markets are homeowners you guys talked about doing over a billion of volume in 'twenty. Two is that still on the table, yes, what should we expect are there. Thanks.
Yeah, I don't I don't think I'm sort of it I don't think we actually conducted a $1 billion to sunlight Max in particular.
So I guess, perhaps you were talking about some other target or there was there were some other some other context. We do you know we do have commitments from contractors that we expect to be a billion and half dollars worth of volume, but that's not necessarily something like Max.
As it relates specifically to some late next week.
As a product in our suite of products that help us win contractors and help us drive volume.
We've absolutely seen that as the case, especially in the home improvement in our home improvement business, where we're able to give a single experience with full spectrum lending within our within our platform and so we've got great contracted feedback, it's helping drive contractors is helping to drive good growth there, but we're not breaking out the sunlight Max.
Volume explicitly.
Okay. Thanks, and then with the ABS markets.
Oh going higher in terms of cost of capital.
It seems like you know where you're sitting with.
It's a credit union relationships that might be a nice and good competitive positioning can you talk through the end of last year, you guys were talking about being more open to a b S. In 'twenty two what's your latest view on a b S. I think he's still my embrace it this year, if not Uh huh.
How do you think you're positioned.
With your current funding sources relative to.
What the ABS market might do that.
Yeah sure I mean look we're always looking at ways to diversify our funding sources and lower our cost of capital and if we think we can accomplish those goals by act of maybe that's markets. Then we'll explore that option for sure and we are.
We have explored it we understand what the execution look like and we're monitoring the deals that everyone is working on as well as talk already as bankers about what things might look like in the current rate environment, though it's hard to imagine that the cost of capital will be competitive with what we have in all of the channels, we'll keep looking at it though for sure and feel like you know as you said.
We are extremely well positioned in a rising rate environment relative to some of our peers and that we really haven't seen them.
Changes in pricing.
We note with our direct channel capital providers that provide us the vast majority of our funding.
Contrast that with the ABS markets, where execution on transactions has changed by.
Number of points I mean, we said in our remarks.
We think it's more than five points and it's probably even more than that so it's a significant change in execution in the ABS markets and we really haven't seen much of a change in our direct channel. So.
Feel really well positioned and feel like we have access to a lot of capital.
And our deposit stories are still heavy on deposits and asset hungry, so feeling pretty good about it.
Okay. Thanks for taking all my questions I'll pass it on.
The next question is from Jeff Osborne with Cowen and company. Please go ahead.
Yes. Good afternoon, a couple of questions on my end I was wondering Matt you mentioned with the cash balance looking at M&A and bolt on acquisitions would those M&A opportunities leverage the same access to distribution in all of your talking points as it relates to the business model or would you be wandering astray.
You know that leveraging the orange platform I'm, just trying to get a sense of how synergistic it would be relative to Oh, two built out over the past five to six years.
Yeah. So you know we're always looking at M&A opportunities and we've been disciplined and will continue to be disciplined that the two areas that we're most focused on are first bolt on acquisitions, where we can.
Further enhanced the relationships and the value proposition with contractors.
It's the first opportunity and then the second is over time, we may look at opportunities to expand into adjacent verticals or through M&A, but we've definitely been very thoughtful we've not announced any acquisitions to date and will continue to be thoughtful and disciplined as we actually look at M&A opportunities.
Got it and then you alluded to.
The supply chain side.
What I'm trying to get at is your visibility at the top of the funnel.
And how has that evolved in February and March is that something that you can articulate.
You know qualitatively as opposed to quantitatively and then I think in the past you've talked about 70 to 75 days or so.
Loan requests to funding status can you give us an update of maybe where that is a normal times and where that is now.
Yeah. So you know those those three macro issues supply chain.
Labor in permitting we saw them through the back half of the year. We continue to see them continue to see that persist I mean, I mentioned in my remarks to give you some context for the impact of that.
We estimate it had about a 10% impact on our funded loans versus where we otherwise would've would've thought would've funded.
So it is it is this somewhat material impact we do expect.
That those issues will abate later later in the year the specifics first quarter.
What was unusual in the first quarter with omicron, which clearly happened at the back half of the fourth quarter.
And has abated in the.
In the first half of the first quarter and so so fortunately, we've seen the market rebound and as as I'm a crime that that way this has passed.
We're on a more normal trajectory and we think the market is on a more normal trajectory at this point.
And just a lag from the top of the funnel to funding status is there a quantitative number you can give us on that.
Stretching out yes, we don't usually yeah. We don't you know we don't typically share that in particular are what I. What I can tell you. Though is we do continue to see that see that lag.
And well maybe there is some some green shoots as of recently that perhaps we see some improvement there I think it's probably too early to say and it is and it is definitely longer than we've seen historically.
Got it and my last quick one for Barry.
You mentioned to a prior questioners.
Question that Q4 had several onetime items that led to the platform fee margin being above.
Trend line or above normal can you just brought off with the top two would be in your mind.
Definitely onetime items, but more.
The swap market hasn't changed as.
As much as it has in the first quarter of this year.
So when I think about our indirect channel, which has some exposure to the market as I mentioned earlier.
That's impacted and in the fourth quarter really haven't been so that's one thing and the other things I would mentioned our installer mix, we have different prices with different sellers capital provider mixture of their prices with different capital providers.
And the factor I mentioned before about the swap market and its impact on the indirect channel. So those are examples of things that can make things move around and examples of things that have made the fourth quarter a special one.
Got it that's very helpful. Thank you so yeah.
Our next question is from Matt Heap mines Loy with credit Suisse. Please go ahead.
Hi, This is Johnny on behalf of the heat.
When I look at our full year 2022 outlook, Yeah, just taking your revenue and the adjusted EBIDTA. Your implied adjusted EBITDA margin is slightly lower compared to what we're seeing in 2021 so.
If you could sort of guide on how we should think about like the cost for 2022 that would be really helpful.
Yeah, that's a good question so.
So we're definitely expecting adjusted EBITDA margin to come down a bit.
There's a few things happening here, but the primary one is related to expenses I think we mentioned some of this in our remarks, but.
In 2022, we're not only going to incur a full year of public company related expenses, whereas in 2021 may only incurred a happier such expenses, but we're also forecasting an increase in some expenses that were artificially depressed in previous periods due to the pandemic.
I think about this as a normalization to a new expense baseline and would expect that our adjusted EBITDA margin.
Will improve into the back half of the year and in future periods as our fixed cost to remain relatively constant in the context of continued volume growth in our operating leverage continues to take hold.
Thank you I'll pass it on.
This concludes the question and answer session I'd like to turn the conference back over to Matt Hello, Terry for closing remarks.
Great. Thank you and thank you everyone for joining us. This evening, we appreciate the opportunity to be able to share. What we think were really strong results to wrap up 2021, I mean, great trajectory going into 2022. So we look forward to sharing our story with you in the future and again. Thank you for your time and have a great evening.
Yeah.
This concludes today's conference call. Thank you for participating you may disconnect your lines have a pleasant day.
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