Q1 2024 Finance of America Co Inc Earnings Call

Operator: Hello, thank you for standing by. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Finance of America first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Hello, Thank you for standing by my name is Sarah and I will be your conference operator today at this time I would like to welcome everyone to the finance of America first quarter 'twenty 'twenty four earnings call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session, and if you would like to ask a question, it is star 1. I would now like to turn the conference over to Michael Fant, Senior Vice President, Finance. You may begin. Thank you, and good afternoon, everyone, and welcome to Finance of America's first quarter 2024 earnings. With me today are Graham Fleming, Chief Executive Officer, Kristen Sieffert, President, and Matt Engel, Chief Financial Officer. As a reminder, this call is being recorded, and you can find the earnings release on our investor relations website at www.financeofamerica.com. In addition, we will refer to certain non-GAAP financial measures.

Michael Fant: You can find reconciliations of non-GAAP-to-GAAP financial measures discussed on today's call to the extent available without unreasonable effort in our earnings press release 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 within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods. These statements are based on the company's current expectations and are subject to the Safe Harbor Statement for forward-looking statements that you will find in today's. However, 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 annual report on Form 10-K for the year ended December 31, 2012, filed We are not undertaking any commitment to update these statements, unless conditioned.

After the Speakers' remarks, there will be a question and answer session and if you would like to ask a question. It is star one.

Michael Fant: Please note that today we are discussing interim period financials, which are on. Now, I would like to turn the call over to Finance of America's Chief Executive Officer, Graham Fleming. Thank you, Michael. Good afternoon, everyone.

I'd now like to turn the conference over to Michael Fant Senior Vice President Finance you may begin.

Graham A. Fleming: And thank you for joining us for our first quarter 2024 earnings. Finance of America continues to deliver against its strategic objectives. We believe the business is well positioned to return to sustained profitability and continues to be the leading provider of home equity based financing solutions for a modern retirement with the potential to reach tens of millions of customers nationwide. To that end, we announced earlier today our plans to consolidate our existing wholesale and retail branding, Finance of America Reverse and AAG, under the single brand name of Finance of America.

Michael Fant: Thank you and good afternoon, everyone and welcome to the finance of America's first quarter 2024 earnings call with me today are Graham Flynn, Chief Executive Officer, Christopher <unk>, President and Matt Ingalls Chief Financial Officer.

Graham A. Fleming: We believe that a unified brand will help elevate the company's product offerings, which is crucial to our broader efforts to modernize how customers perceive and engage with the brand. Looking at the numbers on a continuing operations basis, we record a gap net loss of 16 million, or six cents per basic share, in the first quarter. These results were driven primarily by an improvement in operating performance compared to recent quarters, as margins improved and remained strong through the quarter. On an adjusted basis, in the first quarter, we recognized a net loss of $7 million, or $0.03 per fully diluted share.

Graham A. Fleming: This is a 65% improvement from the net loss of $20 million, or $0.09 per fully diluted share, in the fourth quarter. These numbers point to an overall increase in operating profitability, resulting from both higher revenue and lower costs. In fact, on an adjusted EBITDA basis, the company improved from a loss of $18 million in the fourth quarter to less than $1 million in losses in the first quarter of 2021. During the quarter, reverse volumes were down only 3% to the prior quarter, as previously guided.

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

Michael Fant: 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 discussed on today's call to the extent available without unreasonable efforts in our earnings press release on the Investor Relations page of our website.

Michael Fant: Also I would like to remind everyone that comments on this conference call may be forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 regarding the company's expected operating and financial performance for future periods.

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 todays earnings release.

Michael Fant: 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 Americas Annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 5th.

2024.

Michael Fant: The risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change.

Michael Fant: Please note that today, we are discussing interim period financials, which are unaudited.

Graham A. Fleming: However, improved margins led to a $5 million increase in revenue in our Originations platform. Our net balance sheet markup due to outside factors was minimal for the quarter, as spread tightening and home price appreciation improvements offset an increase in interest. Looking forward, as we come into the spring and summer months and begin to leverage our operational initiatives, we aim to generate an approximate 10% increase in origination volumes for the second quarter to between $465 million and $500 million. I will now turn things over to Kristen for an update on our operations. Thanks, Graham, and good afternoon, everyone.

Michael Fant: Now I would like to turn the call over to finance and Americas, Chief Executive Officer, Graham Flemming Graham.

Graham A. Fleming: Thank you Michael.

Kristen N. Sieffert: We're pleased to share that much of our previously communicated work to streamline our operations is now behind us, and the integration of AAG's platform is complete. In early Q1, we finalized the transition onto one loan origination system, the last step in the full integration process. Completing this integration paves the way for the next pillar of our strategic plan, which is to modernize our go-to-market strategy. The team is energized by the opportunity to broaden our customer base moving forward. The first step is to create a unified brand to optimize and maximize our resources and reach.

Good afternoon, everyone and thank you for joining us on our first quarter 'twenty to 'twenty four earnings call.

Graham A. Fleming: As for America continues to deliver against that strategic plan. We believe the business is well positioned to return to sustained profitability and continues to be the leading provider of home equity based financing solutions for a modern retirement with the potential to reach tens of millions of customers nationwide.

Kristen N. Sieffert: This entails sunsetting both the AAG and FAR brands and unifying under a single brand name of Finance of America. Subject to regulatory considerations, this change is expected to take effect in early Q3. In parallel, we have efforts underway to modernize our digital capabilities and integrate these modern experiences throughout the entire customer journey. We know that mainstream consumers have come to expect a frictionless and intuitive experience, which we intend to deliver through these efforts.

Graham A. Fleming: To that end, we announced earlier today, our plans to consolidate our existing wholesale and retail branding financer, Mark reverse and AEG under the single brand name of Finance of America, We believe that a unified brand will help elevate the company's product offerings, which is crucial to our broader efforts to modernize how customers perceive.

Kristen N. Sieffert: Our team also continues to optimize our core business with a heightened focus on expanding our reach through our wholesale channel. We are seeing growing interest from larger traditional mortgage lenders and servicers, specifically around our HomeSafe Second Lien product. In March, we expanded the reach of this product through a leading broker-facing platform and approved the product to be offered through our principal agent channel, giving partners more flexibility in how they bring the product to market.

Graham A. Fleming: And engage with the brand.

Looking at the numbers on a continuing operations basis, we recorded GAAP net loss of 16 million or <unk> <unk> per basic share in the first quarter. These results were driven primarily by an improvement in operating performance compared to recent quarters as margins improved and remained strong through the quarter on.

Graham A. Fleming: On an adjusted basis in the first quarter, we recognized a net loss of 7 million or <unk> <unk> per fully diluted share. This is a 65% improvement from the net loss of $20 million or <unk> <unk> per fully diluted share in the fourth quarter.

Graham A. Fleming: These numbers point to an overall increase in operating profitability, resulting from both higher revenue and lower costs. In fact on an adjusted EBITDA basis. The company improved from a loss of $18 million in the fourth quarter, so less than $1 million of loss in the first quarter of 2024 <unk>.

Graham A. Fleming: During the quarter reverse volumes were down only 3% to the prior quarter as previously guided however, improved margins led to a $5 million increase in revenue in our originations platform.

Our net balance sheet, Mark up due to outside factors was minimal for the quarter.

Graham A. Fleming: Red tightening in home price appreciation improvements offset an increase in interest rates.

Looking forward as we come into the spring and summer months and begin to leverage our operational initiatives. We aim to generate an approximate 10% increase in origination volumes for the second quarter to between $465 million and $500 million. Let me now turn things over to Christian for an update on our operations Kristen.

Christian: Thanks, Graham and good afternoon, everyone. We're pleased to share that much of our previously communicated work to streamline our operations is now behind us and the integration of Aig's platform is complete in early Q1, we finalized the transition onto one loan origination system. The last step in the full integration process completing this integration.

Graham: And paves the way for the next pillar of our strategic plan, which is to modernize our go to market strategy. The team is energized by the opportunity to broaden our customer base moving forward.

Graham: The first step is to create a unified brand to optimize and maximize our resources and reach this until sunsetting, both AEG and far brands and unifying under a single brand name of Finance of America.

Graham: Subject to regulatory considerations. This change is expected to take effect in early Q3 and.

Graham: In parallel we have efforts underway to modernize our digital capabilities and integrate these modern experiences throughout the entire customer journey, we know that mainstream consumers have come to expect a frictionless and intuitive experience, which we intend to deliver through these efforts. Our team also continues to optimize our core business.

Graham: With a heightened focus on expanding our reach through our wholesale channel. We are seeing growing interest from larger traditional mortgage lenders and servicers, specifically around our homes say second lien product.

Graham: In March we expanded the reach of this product through our leading broker facing platform and approved the product to be offered through our principal agent channel, giving partners more flexibility in how they bring the product to market.

Kristen N. Sieffert: Following the launch in our most recent loan origination system, we've seen interest in the product grow to over 6% of our overall submission volume. Home Safe Second is a great example of our commitment to innovating to attract new kinds of borrowers and serve those who already have a low-rate primary mortgage but want the convenience of a flexible second lien with no monthly mortgage payments required. There is much dialogue about homeowners being locked into their current home due to rising rates and limited inventory. Those homeowners, many of whom have been turned down for a traditional HELOC because of concerns surrounding the ability to make additional debt service payments, have few options to tap their equity.

Graham: Following the launch in the most recent loan origination system, we've seen interest in the product grow to over 6% of our overall submission volume hamzah.

Graham: <unk> is a great example of our commitment to innovating to attract new kinds of borrowers and serve those who already have a low rate primary mortgage but want the convenience of a flexible second lien with no monthly mortgage payments required there.

Graham: There is much dialogue about homeowners being locked into their current home due to rising rates and limited inventory those homeowners many of whom have been turned.

Graham: Traditional HELOC because of concerns surrounding the ability to make additional debt service payments have few options to tap their equity. We are optimistic we can continue to increase volume of this product as interest rates remained higher for longer our product suite is a growing interest to our customer base and we're excited about our increasing pipeline volumes.

Kristen N. Sieffert: We are optimistic we can continue to increase volume of this product as interest rates remain higher for longer. Our product suite is of growing interest to our customer base, and we're excited about our increasing pipeline volume. When you consider the number of seniors who are financially unprepared for retirement while simultaneously holding a record amount of home equity, it's clear that our home equity-based products can be a solution for many older homeowners. Now, I'll turn it over to Matt to discuss our finances. Thank you, Kristen. Good afternoon, everyone.

Graham: When you consider the number of seniors who are financially unprepared for retirement, while simultaneously holding a record amount of home equity, it's clear that our home equity based products can be a solution for many older homeowners now I'll turn it over to Matt to discuss our financials.

Matthew A. Engel: Within our continuing operations for the first quarter, we recognized a gap net loss of $16 million, or $0.06 per basic share. On an adjusted basis, the company recognized a net loss of $7 million for the quarter, or $0.03 per fully diluted share. 65% improvement over the fourth quarter, now performing every quarter in 2020. The key driver was the strong top-line revenues within our Retirement Solutions business of $46 million for the quarter. As expected, funded volumes were modestly down from the fourth quarter as we completed the LOS consolidation.

Matt Ingalls: Thank you Kristen and good afternoon, everyone.

Matthew A. Engel: Within our continuing operations for the first quarter, we recognized GAAP net loss of $16 billion or <unk> <unk> per basic share.

Matthew A. Engel: On an adjusted basis, the company recognized a net loss of $7 million for the quarter or <unk> <unk> per fully diluted share.

Matthew A. Engel: A 65% improvement over the fourth quarter and outperforming every quarter in 2023.

Matthew A. Engel: The key driver was the strong topline revenues that our retirement solutions business of $46 million per quarter as.

Matthew A. Engel: As expected funded volumes were modestly down from the fourth quarter as we completed the <unk> consolidation.

Matthew A. Engel: However, revenue margins for the segment equated to 10.8%, or a 17% increase over the fourth quarter. This is due to spread tightening across our suite of products waiting to improve margins. Expenses decreased from the prior quarter as the company continues to align its infrastructure to our current business model. Turning to the balance sheet, our unrestricted cash balance was $48 million at the end of the first quarter.

Matthew A. Engel: However revenue margins for the segment equated to 10, 8% or 17% increase over the fourth quarter.

Matthew A. Engel: This was due to spread tightening across our suite of products leading to improved margins.

Matthew A. Engel: Expenses decreased from the prior quarter as the company continues to align our infrastructure to our current business model.

Matthew A. Engel: Turning to the balance sheet, our unrestricted cash balance was $48 million at the end of the first quarter comparable to December as additional working capital financing was used to cover operating cash needs.

Matthew A. Engel: Comparable to December as additional working capital financing was used to cover operating cash. We completed two proprietary securitizations during the quarter, but increased production of our HomeSafe product suite kept our loan balances available for securitization at roughly the same as the end of. Our residuals at the end of the first quarter were valued at $250 million, as tightening spreads and increases to home price appreciation assumptions mostly offset the increase in market rates.

Matthew A. Engel: We completed two proprietary securitizations during the quarter, but increased production of our home safe product suite kept our loan balances available for securitization at roughly the same as the end of December.

Matthew A. Engel: Our residuals at the end of the first quarter were valued at $250 million is tightening spreads and increases the home price appreciation assumptions, mostly offset the increase in market rates in the quarter validating our continued confidence in the long term value of these assets.

Matthew A. Engel: This validation of our continued confidence in the long-term value of these assets. For additional information, last month we published a presentation on our investor relations website that addressed the value of these residuals and how we think about our portfolio. Finally, I want to touch briefly on our balance sheet, more specifically the high-yield debt which matures in November 2025. We're moving proactively to review our options and holding productive conversations with the necessary parties to identify an optimal path forward. While it is premature to discuss specifics, we are encouraged by the early conversation. With that, I will hand it back to Graham for closing remarks.

Matthew A. Engel: For additional information last month, we published a presentation on our Investor Relations website that addresses the value of these residuals and how we think about our portfolio.

Matthew A. Engel: Finally, I want to touch briefly on our balance sheet and more specifically the high yield debt, which matures in November 2025.

Matthew A. Engel: We are moving proactively to review, our options and holding productive conversations with the necessary parties to identify an optimal path forward.

Matthew A. Engel: While it is premature to discuss specifics we are encouraged by the early conversations.

Speaker Change: With that let me hand, it back to grab for closing remarks, yes. Thank you Matt.

Graham A. Fleming: Throughout the first quarter, Finance of America continued to execute against its strategic priorities and remains on track to return to sustained profit. As the leading provider of home equity-based financing solutions for a modern retirement, we are well positioned to benefit from home price appreciation and a growing senior homeowner population. And with that, we'll open the call for anyone. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again.

Speaker Change: Throughout the first quarter financial American continued to execute against its strategic priorities and remains on track to return to sustained profitability.

Speaker Change: As the leading provider of home equity based financing solutions for a modern retirement, we are well positioned to benefit from home price appreciation.

Speaker Change: And a growing senior homeowner population.

Speaker Change: And with that we'll open the call for any questions.

Speaker Change: Thank you if you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star. One again. Please ensure your line is a muted if you are called upon one moment. Please for your first question.

Operator: Please ensure your line is unmuted if you are called upon. One moment, please, for your first question. Your first question comes from the line of Douglas Harter with UBS. Your line is open. Thanks.

Graham A. Fleming: I was hoping you could talk about, you know, kind of how you see the market and, more specifically, your volumes progressing now that you've continued to make progress on the integration with AAG. Yes, so Doug, as we look at the, you know, as we look at our pipelines here at the end of April, right, it's clear, we've probably got the largest pipeline that we've had over the course of 23 and 24.

Speaker Change: Your first question comes from the line of Douglas Harter with UBS. Your line is open.

Hoping you could talk about.

Douglas Harter: Kind of how you see the.

Douglas Harter: The market and more specifically your volumes progressing.

Douglas Harter: Now that Youre may continue to make progress on the integration with AG.

Graham A. Fleming: So in my remarks, I guided to about 10% volume increase quarter over quarter. You know, we'd hope to continue that pace, you know, but obviously, it's a little early to comment on q3 and q4, but we're feeling pretty confident that will be between 460 and 500. And q2, which will be a 10% increase quarter over quarter. And I guess within that, how are you seeing, you know, kind of the demand for your different products?

Yes, so Doug as we look at the.

Douglas Harter: As we look at our pipelines here at the end of end of April.

Doug: Alright, it's clear we've probably got the largest pipeline that we've had over the course of 'twenty three and 'twenty four.

Doug: My remarks, I'd guide to about 10% volume increase quarter over quarter.

Doug: We would hope to continue that pace.

Doug: But obviously, it's a little early to comment on Q3, and Q4, but we're feeling pretty confident that we will be between $4 60 and 500.

Doug: In Q2, which will be a 10% increase quarter over quarter.

Doug: And I guess within that how are you seeing.

Kind of the demand for your different products.

Graham A. Fleming: You know, seconds, private techums, you know, kind of is there one product responding more in the market than others right now? I think the one that's not been impacted as much by rates is the HomeSafe Second product. You know, with our Heckum product and the regular HomeSafe product, as the rates rise, the LTVs are compressed a little bit; we don't have that dynamic on the HomeSafe Second.

Doug: Seconds private attack comes kind of as one as one product resonating more in the market then.

Doug: Than others right now.

Doug: I think the one that's not.

Doug: Not been impacted as much by rates is the homestay second product.

Doug: With our with the heck of a product in the regular home safe product as the rates rise. The ltvs are compressed a little bit we don't have that dynamic on the home safe second and so it's freeing up more capital for people to access the cash that they need we see that as one of the bigger growth opportunities for us, especially in conversations with <unk>.

Doug: Our traditional mortgage bankers and servicers that have portfolios of products that borrowers are looking for different solutions that the traditional products just aren't selling the needs right now.

Speaker Change: Great. Thank you.

Graham A. Fleming: And so it's freeing up more capital for people to access the cash that they need. We see that as one of the bigger growth opportunities for us, especially in conversations with larger traditional mortgage bankers and servicers that have portfolios of products that, you know, borrowers are looking for different solutions because the traditional products just aren't filling the needs right now. Great, thank you. Your next question comes from the line of Stephen Laws with Raymond James. Your line is open. All right, good afternoon.

Speaker Change: Your next question comes from the line of Stephen Laws with Raymond James Your line is open.

Stephen Albert Laws: Hi, good afternoon.

Graham A. Fleming: Congratulations on continuing to move forward and nice successes over the last couple of quarters making some progress. You know, as we think about margins, you know, I know you just touched on volumes, do you think that the 10.8 holds up? How do you think about margins and, you know, I guess where they are spread today and Matt, you may have mentioned it roughly in your prepared remarks as far as the loans available for securitization. But, you know, can you talk about the securitization pipeline and the kind of pace of deals that you expect over the next few months? I'm sure Stephen.

Stephen Albert Laws: Congrats on continuing to move forward in <unk>.

Stephen Albert Laws: By successes over the last couple of quarters is making some progress.

As we think about.

Stephen Albert Laws: <unk> margins I know you just touched on volumes do you think the 10 eight holds up how do you think about margins.

Stephen Albert Laws: That's where our spread today and and Matt you May have mentioned it roughly in your prepared remarks as far as the loans available for four.

Stephen Albert Laws: Securitization, but can you talk about the securitization pipeline and kind of the pace of deals that you expect over the next few months.

Matthew A. Engel: So I think that, you know, spreads have been pretty steady now for a few months, and we've seen the effect of that on both of our HMDSP loopholes, as well as our proprietary securitization. You know, during the quarter, we did do a couple of securitizations, but I guess a little bit of our shift of product mix during the quarter maybe tilted a little bit more towards the homestead We still had, you know, in excess of $200 million available for securitization. I think as we look out over the next year or so, we anticipate doing a home safe securitization. Unknown Executive, Johan Gericke, Michael Fant, Graham Fleming, Unknown Executive, Johan Gericke, Great.

Matthew A. Engel: Sure Stephen So I think that.

Matthew A. Engel: While spreads have been pretty steady now for few months and we've seen.

Matthew A. Engel: The effect of that in both of our HMD.

Speaker Change: Those are those are proprietary securitizations.

During the quarter, we did do a couple of Securitizations, but I guess, a little bit our shift of product mix during the quarter, maybe tilted a little bit more towards the home safe product.

Speaker Change: As we still had.

Speaker Change: In excess of $200 million.

Speaker Change: Available for securitization.

Speaker Change: As we look out over the next year.

Speaker Change: Year, so anticipate doing at home safe securitization.

Speaker Change: Some magnitude $300 million of brands every quarter.

Speaker Change: Throughout the rest of this year and maybe into Q1 next year and of course AWS with your model.

Speaker Change: That's really kind of the cadence we're on there.

Speaker Change: On top of that is occasionally we have some season deals that we will call and reissue.

Speaker Change: Opportunistically as we see.

Speaker Change: Opportunities there so maybe every other quarter. So you might expect us to see our culinary issue as well.

Matthew A. Engel: And, you know, I guess we're almost to the middle of the quarter, but any color on, fair value marks quarter to date. I know there's a few different things that go into it. Rates have been up, but now they seem to move lower a little bit. Any comments on, you know, kind of how spreads and HPA assumptions have moved quarter to date? So we update HBA only quarterly when we get the Moody's report.

Speaker Change: Great.

Speaker Change: I guess we're.

Speaker Change: Almost to the middle of the quarter, but any.

Speaker Change: Any color on fair value marks quarter to date, I know theres, a few different things that go into it rates have been up but now they seem to have moved lower a little bit.

Speaker Change: Comments on.

Speaker Change: Kind of how spreads in HPA assumptions have moved quarter to date.

Speaker Change: So we update we only update HCA quarterly when we get the Moody's when we get the Moodys report.

Matthew A. Engel: Right, I would say, you know, everything that we read lets us know that HPA remains robust. So, more than likely, there might be some pickup for HPA in Q2. You know, obviously rates did tick up in April, which is a negative. But they've started to come down again. You know, so we really have to wait till the end of the quarter, Stephen, to see. But as rates go up, it's a negative. As long as HPA goes up, it's a positive sign.

Speaker Change: Right I would say everything that we read.

Speaker Change: No that HPA remains robust.

Speaker Change: So more than likely there might be some pickup for HPA in Q2, obviously rates. They did tick up in April which is a negative they start to come down again.

Speaker Change: So we really have to wait till the end of the quarter Steve.

Speaker Change: Stephen to see.

Speaker Change: But as rates go up it's a negative as HBA goes up it's positive.

Speaker Change: Honestly as spreads tightened and it's a positive but.

Speaker Change: As Matt said spreads have remained consistent.

Graham A. Fleming: And obviously, as spreads tighten, it's a positive. But, you know, as Matt said, spreads have remained consistent. We think there's HPA, there's going to be HPA growth in Q2, and we'll just have to see where rates end at the end of June. And then, you know, as you think about, I don't know if you want to talk about this on an A&I basis or, frankly, EBITDA, you're almost at breakeven, really close in Q1.

Speaker Change: We think theres HPA is going be HPA growth in Q2, and we will just have to see where rates and at the end of the end of June.

Graham A. Fleming: But, you know, when you think about where margins are today, and then you look at the plus 10% on the volume outlook, do you think, you know, A&I, is that a 2Q event that we see at break even? Or is it 3Q?

Speaker Change: Great and then as.

Speaker Change: As you think about I don't know if you want to talk about the solo and Eni basis are frankly, EBITDA youre almost at breakeven really close in Q1, but when you think about where margins are today and then you look at the plus 10%.

Speaker Change: Sure.

Speaker Change: On the volume outlook do you think.

Speaker Change: Is that a is that a <unk> event that we see as a breakeven or is it <unk> or how do you think about the breakeven point and then.

Matthew A. Engel: Or, you know, how do you think about the break-even point? And then, you know, profitability growth in the back half of the year? So I think, I mean, somewhere in that timeframe, I appreciate the comments and we've certainly made a lot of progress over the past year. Now that the integration of AAG is really completed, and we have all the legacy discontinued operations wound down, we're really able to focus on our core business, start to increase the top line revenue, get production back up, and, you know, frankly, continue to work on our expenses, which have been trending And we think, you know, that'll continue to be the case, of course, the next one. So it kind of depends, but you're kind of spot on. We're right in that ballpark now.

Speaker Change: Profitability growth in the back half of the year.

Speaker Change: So I think it's.

Speaker Change: Somewhere in that timeframe on the I appreciate the comments and we've certainly made a lot of progress over the past year.

Speaker Change: Now that the integration of AG is really completed and we have to kind of call. The legacy discontinued operations kind of wound down we were able to kind of focus on our core business.

Speaker Change: Starting to increase the topline revenue get the production back up.

Speaker Change: And frankly continue to work on our expenses, which have been trending down and we think that will continue to be the case of course of the next year.

Matthew A. Engel: We're in Q2, possibly Q3. We think we can turn the corner based on the current trajectory that we have going. Great. And one final one, you know, can you talk to your financing lines, warehouse facilities, you know, your capacity there? How are your conversations with those lenders going?

Speaker Change: So it kind of depends but youre kind of spot out are right in that ballpark now we're into Q2 cost for Q3, we think we can turn the corner based upon the trajectory that we have.

Speaker Change: Go ahead.

Speaker Change: Great and one final one.

Can you talk to your.

Speaker Change: Financing lines warehouse facility is your capacity there how are conversations with those lenders.

Matthew A. Engel: And, you know, you know, do you have what you need in place to support your, you know, your growth outlook? You know, we do in our core financing. We have really adequate financing of every sort, kind of the two areas where we're really looking. For some change or change in the financing mixes, can we obtain additional leverage on the MSR asset?

Speaker Change: Do you have what you need in place to support the.

Speaker Change: Your growth outlook.

Speaker Change: We do in our other core financing.

Speaker Change: We have really adequate financing of every sort of kind.

Speaker Change: The two areas, where we're really looking.

Speaker Change: For some change or a change in the financing mix as one can we obtain additional leverage on the MSR asset alright, as you look at the supplemental materials, we posted in April to our Investor website would talk a little bit about that and get additional leverage on the MSR, but just.

Matthew A. Engel: All right, as you look at the supplemental materials we posted on April to our investor website, we talked a little bit about that and getting additional leverage on the MSR, which has been, you know, a bit of a difficult asset to finance over the past 12 months. And then separately, as we also mentioned, we'll be looking to do something with our high-yield debt, which matures at the end of 2025, about, you know But again, it is too soon to speak to specifics there, but definitely on our radar is one of the financing facilities we need to tend to. Great I know you're working diligently on that.

Speaker Change: A bit of a difficult asset to finance over the over the past 12 months.

Speaker Change: And then separately as also we mentioned, we'll be looking to do something with our high yield debt, which matures at the end of 2025.

Speaker Change: Possibly done something creative with that but too soon to speak of specifics there, but definitely on our radar as one of the financing facilities, we need to.

Speaker Change: Yes.

Matthew A. Engel: I look forward to the update when you have one to provide the market. I appreciate the comments this afternoon. There are no further questions at this time.

Speaker Change: Grateful familiar working diligently on that and look forward to the update when you have one to provide the market I appreciate the comments this afternoon.

Speaker Change: There are no further questions at this time I'll turn the call to Graham Fleming for closing remarks.

Graham A. Fleming: I'll turn the call over to Graham Fleming for closing remarks. Thank you everybody for joining our Q1 call. We look forward to having the call in August and updating you on our progress around Q2 and providing some information around what we see for Q3. So thank you everybody for joining. This concludes today's conference call. Thank you for joining. You may now disconnect your line.

Graham A. Fleming: Thank you everybody for joining our Q1 call. We look forward to having the call in August and updating you on our progress around Q2, and providing some information around what we see for Q3. So thank you everybody for joining the call today.

Speaker Change: This concludes today's conference call. Thank you for joining you may now disconnect your lines.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Great.

Okay.

Speaker Change: Yes.