Q4 2024 Finance of America Companies Inc Earnings Call
Celine: Thank you for standing by. My name is Celine and I will be your conference operator today.
Thank you for standing by my name is Susan and I will be your conference operator today at this.
Celine: At this time, I would like to welcome everyone to the Finance of America 4Q&F by 2020 for Earnings All lines have been placed on mute to prevent any background noise.
This time I would like to welcome everyone to the finance of America, <unk> FY 'twenty earnings call.
All lines have been placed on mute to prevent any background lease after the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on great telephone keypad, if you wish.
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Michael Fant: I would now like to turn the call over to Michael Fant. Please go ahead.
Yeah.
Mike: I would now like to turn the call over to Mike go fight, but east go ahead.
Graham Fleming: Thank you and good afternoon everyone and welcome to Finance of America's fourth quarter and full year 2024 earnings call. 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 and presentation on our investor relations website at ir.financeofamericacompany.com. In addition, we will refer to certain non-GAAP financial measures. You can find reconciliations of non gap to gap financial measures to the extent available without unreasonable efforts discussed on today's call in our earnings press release and presentation on the investor relations page of our website.
Mike: Thank you and good afternoon, everyone and welcome to finance of America's fourth quarter and full year 2024.
Speaker Change: With me today are Greg.
Speaker Change: Extra officer Clinton President.
Speaker Change: And Matt Engel Chief Financial Officer.
Speaker Change: As a reminder, this call is being recorded.
Speaker Change: You can find the earnings release and presentation on our Investor Relations website.
Speaker Change: That's fine.
Speaker Change: The company does.
Speaker Change: In addition, we will refer to certain non-GAAP financial measures on this call.
Speaker Change: You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts discussed on today's call in our earnings press release and presentation on the Investor Relations page of our website.
Graham Fleming: 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 earnings release.
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.
Speaker Change: Regarding the company's expected operating and financial performance for future periods.
Speaker Change: Statements are based on the company's current expectations and are subject to the safe Harbor statement for forward looking statements.
Speaker Change: Is there this earnings release.
Graham Fleming: 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 for America's Annual Report on Form 10-K for the year ending December 31, 2023, followed with the SEC on March 15, 2020. As such, risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditioned.
Speaker Change: Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of registered other factors, including those that are described in the risk factors section of <unk>.
Speaker Change: My name is Americas annual report on Form 10-K for the year ended December 31 2023.
Speaker Change: Yeah.
Speaker Change: March.
Speaker Change: Yes.
Speaker Change: As such risk factors, making a message and updated in our subsequent filings with the SEC.
Speaker Change: Not undertaking any commitment to update these statements if conditions change.
Graham Fleming: Please note, today we will be discussing interim period financials for our continuing operations, which are not.
Speaker Change: Please note today, we will be discussing interim period financials for our continuing operations.
Graham Fleming: 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, and thank you for joining us today. To begin, I would like to highlight the successful year we had in 2024.
Grant: Now I would like to turn the call over to finance, the Americas, Chief Executive Officer Grant funding grant. Thank.
Michael: Thank you Michael.
Michael: Afternoon, everyone and thank you for joining us today to begin I would like to highlight the successful 2024.
Graham Fleming: I'll then turn things over to Kristen to share updates on the business, followed by a review of our financials from Matt. 2024 was a year of significant momentum for finance in America. Throughout the year, we accomplished numerous strategic objectives that strengthened our balance sheet and enhanced the business, driving the company's return to profitability. Despite market uncertainty in 2024, we focused on what we could control to improve the fundamentals of the business. We integrated our retail platform, finalized our corporate bond exchange, completed our reverse stock split, rationalized corporate overhead, and increased our funding facility.
Christian: Then turn things over to Christian to share updates on the business followed by a review of our financials from that.
Christian: 2024, it was a year of significant momentum for financial margin throughout the year, we accomplished numerous strategic objectives that strengthens our balance sheet and enhance the business driving the company's return to profitability.
Christian: Despite market uncertainty in 2024, we focus on what we can control to improve the fundamentals of the business, we integrated our retail platform.
Christian: Finalized our corporate bond exchange.
Christian: Please don't reverse stock split rationalized corporate overhead and increased our funding facilities we.
Graham Fleming: We believe these actions have a position as well to execute our 2025 strategic objectives. For the year, we funded more than $1.9 billion in loans to help our customers, a 19% increase in volume year over year. Carrying this momentum into 2025, we expect full year origination volume to be in the range of $2.4 to $2.7 billion. A 26% to 42% increase from 2014. Turning to the income statement, in 2024, the company recognized positive results for gap net income of $40 million, adjusted net income of $14 million, and adjusted EBITDA of $60 million, reflecting continued operational For more information visit www.FEMA.gov These improvements are best represented by the $200 million increase in gap net income and the nearly $100 million increase in adjusted net income from 2023 to 2024.
Christian: We believe these actions have positioned us well to execute our 2025 strategic objectives for.
Christian: For the year, we funded more than $1 9 billion in walls to help our customers and 19% increase in volume year over year.
Christian: Carrying this momentum into <unk> 'twenty five we expect full year origination volumes being in the range of two points to 44 to $2 7 billion.
Christian: 96% to 42% increase from 24 <unk>.
Christian: Turning to the income statement in 2024, the company recognized positive results for GAAP net income of $40 million adjusted net income of $14 million and adjusted EBITDA of $60 million, reflecting continued operational improvements.
Christian: These improvements are best represented by the $200 million, increasing GAAP net income and the nearly $100 million increase in adjusted net income from 'twenty three 'twenty four.
Graham Fleming: I'm pleased with our performance, which is a testament to the hard work and dedication of our team. Finance of America is making home equity a mainstream component of retirement planning, and we remain confident in our strategic direction and the long-term value For additional information, please refer to the presentation on our investor relations website, outlining our total investable market and investment opportunities.
Christian: So our performance, which is a testament to the hard work dedication of our team.
Christian: Finance and America is making called equity a mainstream component of retirement plan and we.
Christian: We remain confident in our strategic direction and the long term value of the business.
Christian: For additional information please refer to the presentation on our Investor Relations website outlining our total addressable market and investment opportunity.
Graham Fleming: As we wrap up 2024, I want to thank our incredible team for their dedication and hard work. Because of their efforts, Finance of America is well-positioned for an exciting year ahead. In 2025, we look forward to building our own momentum, expanding our reach, and driving even greater value for our customers and stakeholders.
Christian: As we wrap up 2024, I want to thank our global team for their dedication our work because of their efforts and NASA American is well positioned for an exciting year ahead and 25, we look forward to building on our momentum expanding our reach and driving even greater value for our customers and stakeholders now I will turn it over.
Kristen Sieffert: Now I'll turn it over to Kristen for an update on our offer. Thank you, Graham, and good afternoon, everyone. 2024 marked a significant period of strategic alignment for the business. We successfully unified the company under a single brand and fortified our foundation and culture to support the growth we have planned for the forthcoming years. Despite the challenges that acquisitions can often present, I'm exceptionally proud of how our team has collaborated to establish a robust footing for this next chapter. Key milestones included the complete integration of the retail platform, which enhanced our efficiency and profitability. We expanded our second lien reverse mortgage to additional states and made the product available to our wholesale partners in one of the industry's leading technology platforms. We also overhauled our data and reporting infrastructure using AI-driven tools, enabling us to capitalize on trends that drive performance.
Christian: Kristen for an update on our operations. Thank you grant and good afternoon, everyone 'twenty 'twenty four and marks a significant period of strategic alignment.
Kristen: We successfully unifying the companies under a single brand and fortify our foundation and all charged to support the growth we have Brian.
Christian: Despite the challenges that acquisitions can often.
Christian: And that definitely got authority collaborated to establish robust funny for this next chapter.
Christian: Key milestones included the complete integration of the retail platform, which enhance our efficiency and profitability. We expanded our second lien reverse mortgage two additional days and made the product available to our wholesale partners and one of the industry leading technology platform.
Christian: We also overhauled our data and reporting infrastructure, using AI driven tool, enabling us to capitalize on trends that Brian perform these.
Kristen Sieffert: These milestones, combined with successful execution of our remaining operational initiatives, positioned us to close 2024 with our largest production month since 2022. Looking ahead, we anticipate continued growth as we further optimize the fundamentals within each channel and focus on areas with significant upside opportunities. This year, we also added new leadership hires to drive our continued transformation.
Christian: These milestones combined with successful execution of our remaining operational.
Christian: Possession of the post 2024 with our largest production in 2018.
Christian: <unk> ahead, we anticipate continued growth as we further optimize the fundamental within each channel and focus on areas with significant upside opportunity.
Christian: This year, we also added new leadership hires to drive our continued transformation joining our finance at American reverse team are Brian Mooney as Chief information officer, and cream beneath that as chief customer officer, We believe their leadership will be pivotal in enhancing the customer journey and enabling a more meat.
Kristen Sieffert: Joining our Finance of America Reverse team are Brian Tonin as chief information officer and Karim Benessa as chief customer officer. We believe their leadership will be pivotal in enhancing the customer journey and enabling us to more meaningfully tap into the $14 trillion senior home equity market. While we experienced significant momentum in our Homestay Second product in 2024, with 77% growth between the first and second half of the year, the market opportunity is staggering relative to our current penetration. The demand for loans among homeowners aged 55 and above remains a significant portion of the broader home equity market, representing over 31% of all second lien originations in 2023, based on data made available on the FFIDC HMDA platform.
Christian: And we have instead of 14, three trillion dollars senior hung up with the market.
Christian: We experienced significant momentum in our home base back in product in 2024 was 77% growth between the first and second half of the year the market opportunity is down here relative to our current penetration.
Christian: The demand for loans among homeowners age 55, and above remains a significant portion of the broader equity market representing over 31% of all second lien originations in 2023 based on being made available on the <unk> I E.
Christian: We're applying our share to about $167 million second lien origination reported by inside mortgage any answer to the first nine months of 2008 more seniors would represent roughly $50 billion in second lien origination paddy.
Kristen Sieffert: Applying that share to the $167 billion in second lien originations reported by Inside Mortgage Finance for the first nine months of 2024, seniors would represent roughly $50 billion in second lien originations annually. However, within this massive market, Homestay Second originations accounted for only one-tenth of 1% of the total lending to this demographic. This highlights the enormous opportunity ahead. By capturing even a small fraction of this market through our digital transformation, expanded partnerships with traditional lenders, and modernized advertising campaign and brand platform launching in Q2 this year, we believe we can drive substantial growth in home equity for retirement adoption.
Christian: However, within this mountain of Mark ads on Facebook and originations accounted for only 110th of 1% of the total lending to this demographic.
Christian: This highlights the enormous opportunity ahead by capturing even a small fraction of this market through our digital transformation expanded partnerships with traditional lenders and modernized advertising campaign and brand bought more than one in Q2. This year. We believe we can drive substantial growth and hung up waiting for retirement adoption.
Christian: <unk>.
Kristen Sieffert: Despite operating in a challenging mortgage environment, our team delivered exceptional performance in 2024. With strong demographic tailwinds and a growing emphasis on home equity solutions, we will continue to drive innovation and expand our offerings to capture a growing market.
Christian: Despite operating in a challenging mortgage environment, our team delivered an exceptional performance in 'twenty anymore with strong demographic tailwind and a growing emphasis on home Iot solutions, we will continue to drive innovation and expand our offerings to capture growing market. We are optimistic about what we can achieve in the years ahead with our talented.
Kristen Sieffert: We are optimistic about what we can achieve in the years ahead with our talented team, strategic vision, and operational strength to continue driving success and value creation.
Christian: <unk> strategic vision and operational strength to continue driving success and value creation now I will turn it over to Matt to discuss our financials Matt.
Matthew Engel: Now I'll turn it over to Matt to discuss our financials. Matt? Thank you, Kristen. Finals of America finished 2024 on a strong note, a Q4 funding volume of $534 million, surpassing our previously provided guidance. For the full year, we funded $1.93 billion in volume, a 19% year-over-year increase, reflecting our strategic growth initiatives and disciplined execution. This translated to net income of $40 million, adjusted net income of $14 million, adjusted EBITDA of $60 million, and adjusted EBS of 60 cents for fiscal year 2024. For the fourth quarter, the company reported a net loss of $143,595,000 per share.
Christian: Kristin.
Speaker Change: Well if America finished 2024 on a strong note Q4 funding volume of 534 million, surpassing our previously provided guidance for.
Speaker Change: For the full year, we funded $1 93 billion in volume, 19% year over year increase in our <unk>.
Speaker Change: Strategic growth initiatives and disciplined execution.
Speaker Change: This translated to net income of $40 million adjusted net income of $14 million.
Speaker Change: Adjusted EBITDA was $60 million and adjusted EPS of <unk> 60 for fiscal year 2024.
Speaker Change: For the fourth quarter, the company reported a net loss of $143 million or $5 95 per share.
Matthew Engel: However, our adjusted net income of $5 million, or $0.21 per share, reflects our continued strong performance for 2024. Year over year, we achieved a $206 million increase in gap net income and a nearly $100 million increase in adjusted net income, a 178% improvement in adjusted EBITDA, and a 116% rise in adjusted EPS compared to the full year of 2023.
Speaker Change: However, our adjusted net income of $5 million or 21 cents per share reflects our continued strong performance in 2024.
Speaker Change: Year over year, we achieved a $206 million increase in GAAP net income and a nearly $100 million increase in adjusted net income.
Speaker Change: 78% improvement in adjusted EBITDA, and 116% rise in adjusted EPS compared to the full year 2023.
Matthew Engel: This marks a significant improvement from last year when we were still integrating our retail platform and navigating margin compression due to broader margin conditions. Additionally, our corporate cost structure has continued to improve, building on the nearly $90 million in annualized expense reductions we achieved last year. These structural changes have positioned us for stronger financial performance moving forward.
Speaker Change: This marks a significant improvement from last year, we were still integrating our retail platform and navigating margin compression due to broader market conditions.
Speaker Change: Our corporate cost structure has continued to improve building on the nearly $90 million in annualized expense reductions we achieved last year.
Speaker Change: These structural changes have positioned us for stronger performance moving forward.
Matthew Engel: Our profitability improvements were driven by three key factors. First, reverse low volumes grew by 19%, driven by several strategic initiatives. We remain the largest issuer of HMDS 2024, while also expanding our non-agency reverse offerings, resulting in a 73% increase in non-agency reverse volume year-over-year. Our second lien product, HomeSafe Second, scaled significantly, achieving nearly 400% year-over-year growth, demonstrating strong demand for homeowners seeking to tap into home equity while preserving their low-rate first lien mortgage. Additionally, successfully integrated our retail platform, streamlined the loan origination and funding process.
Speaker Change: Our profitability improvements were driven by three key factors.
First reverse low volumes grew by 19% driven by several strategic initiatives.
Speaker Change: We remain the largest issuer of <unk> 2024, while also expanding our non agency reverse offerings, resulting in a 70% increase in non agency reverse volumes year over year.
Speaker Change: Our second lien product Jose second scaled significantly achieving nearly 400% year over year growth demonstrating strong demand homeowners seeking attempted to home equity while preserving their low rate first lien mortgages.
Speaker Change: Additionally, we successfully integrated our retail platform streamline the loan origination and funding process.
Matthew Engel: Second, an expansion of revenue margins within our Originations platform. During 2023, business recognized a revenue margin of 9.2% on $1.6 billion of production. During 2024, this margin grew to 10.7% on $1.9 billion of production, representing a 16% increase in margin. This improvement was driven by several factors, including an additional quarter of production from the onboarded retail platform, which contributed $125 million more in volume compared to 2023. Additionally, a product that shifted toward our proprietary non-agency products tripped into higher margins. These factors, combined with improved execution on proprietary products, contributed to the overall revenue margin expansion, which we expect to continue in 2025.
Speaker Change: Second is an expansion of revenue margins within our originations platform. During 2023 business recognized in revenue margin of nine 2% at $1 6 billion of production.
Speaker Change: In 2020 for this margin grew to 10, 7% at $1 9 million of production, representing a 16% increase in margin.
Speaker Change: This improvement was driven by several factors, including the additional quarter of production from the Onboarding retail platform.
Speaker Change: <unk> contributed $125 million more in volume compared to 2023.
Speaker Change: <unk> product mix shifted toward our proprietary non agency products contributing to higher margins.
Speaker Change: These factors combined with improved execution of our proprietary products contributing to the overall revenue margin expansion, which we expect to continue in 2025.
Matthew Engel: Third, we achieved significant cost efficiencies and reductions to discipline and expense management, resulting in a $48 million reduction in our cost. This can be attributed to technology-driven process automation, which streamlined load processing and eliminated operational efficiency. Lower Corporate Overhead, Chief through Workforce Optimization, Real Estate Consolidations, and Administrative Expense Reduction. as well as improve funding efficiency as our expanded warehouse lending capacity and strategic financing initiative help lower our funding costs and enhance our liquidity. Other net value gains remain positive despite the 10-year Treasury yield increasing by nearly 75 basis points for the year. This was driven by tighter spreads, increased home price appreciation expectations, and slower prepayments.
Speaker Change: Third we achieved significant cost efficiencies and reductions through disciplined expense management, resulting in a 48 million reduction in our cost base.
Speaker Change: This can be attributed to technology, driven process automation with streamlined loan processing and eliminated and operational efficiencies.
Speaker Change: Lower corporate overhead chief their workforce optimization real estate consolidations and administrative expense reductions.
Speaker Change: As well as improved funding efficiency as our expanded warehouse lending capacity and strategic buys in initial lower our funding costs and enhance our liquidity.
Speaker Change: Although net other net fair value gains remained positive. Despite the 10 year treasury yield increasing by nearly 75 basis points for the year.
Speaker Change: This was driven by tighter spreads increased home price depreciation of expectations and slower prepays.
Matthew Engel: Looking ahead, our Improved Financial Foundation and Discipline Cost Management efforts have set the stage for continued profitability and growth in 2025. For the first quarter of 2025, we expect origination volume to be between 525 to 550 million, a 25 to 30 percent increase from the first quarter of 2024. For the first quarter, this volume has been coupled with strong revenue margins in our originations platform, which should lead to results similar to the third quarter of 2024. Additionally, we reaffirm our full year adjusted debt income projection in the range of $2.60 to $3 per share, supported by our focus on cost discipline and capital efficiency.
Speaker Change: Looking ahead, our improved financial burden.
Speaker Change: Foundation and disciplined cost management efforts have set the stage for continued profitability and growth in 2025.
Speaker Change: For the first quarter of 2025.
Speaker Change: We expect origination volume to be between $525 million to $550 million, 25% to 30% increase from the first quarter of 2024.
Speaker Change: For the first quarter. This volume has been coupled with strong revenue margin and our originations platform, which should lead to resolve similar to the third quarter of 2024.
Speaker Change: Additionally, we reaffirm our full year adjusted net income projection in the range of $2 60 to $3 per share supported by our focus on cost discipline and capital efficiency.
Matthew Engel: February 2025, we successfully completed the largest securitization of non-agency proprietary product in the company's history. This transaction included a mix of new and seasoned collateral, demonstrating our ability to execute complex capital markets transactions at scale. This milestone reinforces our position as a leader in the non-AHC reverse mortgage market while enhancing liquidity and supporting continued growth. As we continue to build on our momentum, our focus remains on delivering profitable growth, optimizing our capital structure, and driving long-term shareholder value. With our strategic initiatives in place, we are well-positioned to capitalize on the market opportunities and sustain our trajectory in 2025.
Speaker Change: February 2025, we successfully completed the largest securitization of non agency proprietary product in the company's history. This.
Speaker Change: This transaction third a mix of new and seasoned collateral demonstrating our ability to execute complex capital market transactions at scale.
Speaker Change: This milestone reinforces our position as a leader in the non HCA reverse mortgage market, while enhancing liquidity and supporting continued growth.
Speaker Change: As we continue to build on our momentum our focus remains on delivering profitable growth.
Speaker Change: Our capital structure, and driving long term shareholder value.
Speaker Change: Our strategic initiatives in place, we are well positioned to capitalize the market opportunities and sustain our trajectory in 'twenty five and beyond.
Graham Fleming: With that, let me hand it back to Graham for closing remarks.
Graeme: With that let me hand back to Graeme for closing remarks, yes. Thank.
Graham Fleming: Yes, thank you, Matt. 2024 was a year of significant transformation for our business, making us notably stronger and more resilient compared to 2020. We achieved substantial progress across multiple key areas, positioning as well for 2025. Operationally, we expanded our product offerings, launched targeted marketing campaigns, and strengthened our brand presence. Financially, our discipline management and strategic initiatives have led to substantial improvements in our financial health. The demographic trends in the U.S. further reinforce our confidence in the long-term value proposition of our business. With a growing retiree population and substantial home equity among older homeowners now exceeding $14 billion, we are well positioned to capitalize on favorable market conditions.
Graeme: Thank you Matt.
Graeme: 24 was a year of significant transformation for our business, making us, notably stronger and more resilient converge towards 'twenty three.
Graeme: We achieved substantial progress across multiple key areas positioning us well for 2025 operationally, we expanded our product offerings launched targeted marketing campaigns and strengthened our brand breasts.
Graeme: Our disciplined management and strategic initiatives have led to substantial improvements in our financial health.
Graeme: The demographic trends in the U S. Further reinforce our confidence in the long term value proposition of our business with a growing retiree population and substantial home equity among older homeowners now exceeding 14, Julien we are well positioned to capitalize on favorable market conditions.
Graham Fleming: We are confident in our ability to continue to deliver and value by empowering a growing customer base to leverage home equity for a better retirement.
Graeme: We're confident in our ability to continue delivering value by empowering our growing customer base to leverage home equity for a better returns.
Celine: And with that, we'll open the call up for some questions. Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again.
Graeme: That we will open the call up for some questions.
Graeme: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press <unk> one on <unk>.
Graeme: Alison Keith duties to join the queue, if you will.
I would like to withdraw your question simply press Star one again.
Celine: If you are called upon to ask a question and are listening via a loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
Graeme: I call. It a fantastic question and now you're listening via loudspeakers device. Please pickup your handset and ensure that your phone is not on mute when asking your question.
Stephen Laws: Your first question comes from the line of Stephen Laws with Raymond James. Please go ahead. Hi, good afternoon.
Graeme: Your first question comes from the line of.
Steve: Steve <unk> with Raymond James Please go ahead.
Speaker Change: Hi, good afternoon.
Stephen Laws: I kind of want to get a little color. I think you guys hit a couple of and Matthew Engel.
Speaker Change: I kind of want to get a little color. Since you guys had a couple of things.
Stephen Laws: So, I'm going to start off with a question that I think is a bit of a point through the prepared remark, but as I think about the net origination gain number that runs through revenue, you know, Matt, and you mentioned Q1 may look more like Q3 of last year, but was there some pressure on margins just given the rates moving higher, created somewhat of a headwind as we move through Q4, and is that trend something we're seeing reversing in Q1, or can you maybe talk a little bit about the net gain on originations line? Thanks, Stephen.
Point.
Speaker Change: Third remarks, but yes as.
Speaker Change: As I think about the net origination gains.
Speaker Change: Number that runs through revenue.
Speaker Change: Matt and you mentioned Q1 May look more like Q3 of last year, but.
Speaker Change: Was there some pressure on margins just given the rates moving higher as clean as somewhat of a headwind as it relates to Q4 and is that trend something we're staying reversing in Q1, So maybe talk a little bit about the.
Speaker Change: The net gain on origination volume.
Thanks Steven.
Matthew Engel: Yeah, I think it's fair to say, you know, rates have been a little volatile. There was a little bit of headwind in Q4 as rates kind of increased. You know, we've seen a lot of that starting to decrease here in the first quarter. We're almost. mostly way through the first quarter. We have pretty good sense of how first quarter is shaping up. So we think all in, you know, comparing the third quarter of last year is probably a fair comparison. But the factors you point out, I think, are are Great. And then I was going to add to that, right?
Steven: Yes, I think it's fair to say rates have been a little volatile.
Steven: There was a little bit of headwind into Q4 as rates kind of increased.
Steven: We've seen a lot of that and started to decrease here in the first quarter.
Steven: Most.
Steven: Most of the way through the first quarter, we have pretty good sense of how first quarter shaping up.
Steven: So we think all in comparing the third quarter of last years by a fair comparison.
Steven: Factors you pointed out I think.
Steven: Correct.
Steven: Great.
Steve: Yes, Steve I was just going to add to that right. So.
Matthew Engel: So when we price our loans to the consumer, right, that initial rate determines the proceeds that the consumer receives, right? So obviously given the demographic that we deal with, right, we don't, as we work through the process, we don't change those rates because that would directly impact the cash proceeds that the senior would receive. So, you know, we kind of hold that rate. So unfortunately with the volatility in Q4, it did lower revenue margins. You know, I think as we said on the last call, you know, Q3 was a little higher than what we've seen on an average basis.
Steve: When when we price our loans to the consumer at that initial rate.
Steve: Determines the proceeds.
Steve: That the consumer receives right. So obviously given the demographic that we deal with right. We doubled as we work through the process. We don't change those rates because that would directly impact the cash proceeds of senior would receive so we kind of hold that rate. So unfortunately with the volatility in Q4 that did lower revenue margins.
Steve: I think as we said on the last call Q3 was a little higher than what we've seen on an average basis in Q4 is a little lower but the overall year.
Matthew Engel: And Q4 is a little lower, but, you know, the overall year, you know, they're kind of consistent to Q1 and Q2 of last year. And, you know, we kind of expect, you know, we kind of expect similar margins in 25.
Steve: The kind of consistent to Q1 and Q2 of last year.
Steve: We kind of expect similar margins in 'twenty five.
Stephen Laws: Great, appreciate that.
Speaker Change: Great I appreciate that and then I wanted to touch on the guidance I know you guys reaffirmed guidance and Graham you started with us.
Stephen Laws: And I wanted to touch on the guidance. You know, you guys reaffirmed guidance and Graham, you started with a kind of providing a range on originations that underpins that guidance, I believe. And then, Matt, if we take your Q1 number, you're really looking at about $2 billion of remaining originations through the last three quarters of this year. Is that going to continue to ramp through the year under your expectations, or do you think it plateaus at some point?
Speaker Change: Kind of providing a range on origination setup that underpins that guidance I believe.
Speaker Change: And then and then Matt if we take your Q1 number that you're really looking at about $2 billion of remaining originations through the last three quarters of this year.
Speaker Change: Is that going to continue to ramp through the year on to your expectations or do you think it is.
Speaker Change: Toes at some point.
Matthew Engel: And then maybe as a supplement to that question, Kristen, I know you've talked about the unified under a single brand. Can you talk about the marketing initiatives and kind of push and advertising that may launch here in the coming months and how you expect that to drive volume? So, there's a lot in there we may, you know, hand it off to our side, but I do think that you should expect to see some ramp during the year. You know, 1st quarter, honestly, was always expected to be a little bit weaker just because in our retail platform, in particular, we scale back marketing on the November and December holiday periods.
Speaker Change: And then maybe as a supplement to that question, Chris scenario, you've talked about the unified under a single brand can you talk about the marketing initiatives and kind of.
Chris: Pushing and advertising that may launch here in the coming months and how you expect that to drive volume over the year.
Chris: So there's a lot in there we made a couple of years.
Chris: Our site.
Chris: I do think that.
Chris: You should expect to see some ramp during the year first quarter, obviously was always expected to be a little bit here, just because of that our retail platform. In particular, we scaled back marketing I was in November and December holiday periods were kind of coming out of the gate both stronger in Q1 that should continue to grow in the course of the year.
Kristen Sieffert: We're kind of coming out of the gate full stronger in Q1 and that should continue to grow over the course of the year. Also, Chris, if you speak to, you know, we're doing a lot to kind of roll out, scale up the homestay cycle program, which really we think will have an impact in the 2nd half of this year in particular, but I would expect to see some sequential growth throughout the year.
Chris: Chris I can speak to we're doing a lot to kind of roll out and scale up the homestay second program, what Julian will have an impact in the second half of this year in particular, but I would expect some sequential growth throughout the year.
Kristen Sieffert: Yeah, so I'd add to that. Obviously, the Homesafe Second product, there's a there's a huge upside there. And with the targeted marketing campaign supporting that product to MassPointe, we do expect that that continues to ramp. you know, mid-year this year, and then well beyond that, I think year over year would be the, would be the goal. As it relates to the marketing initiative, I think I've mentioned to you before, we've invested quite heavily in consumer research to really understand how to better, you know, reach the total addressable market that exists. And we've been working for, I would say, probably the last year now on a complete advertising and brand platform transition.
Chris: Yes, so I would add to that obviously the wholesale second product there that there is huge upside there and with the targeted marketing campaigns supporting our products and that you expected that continues to ramp.
Chris: Yes mid year. This year, and then beyond that I think year over year would be that would be the goal.
Chris: As it relates to the marketing initiatives.
Chris: I think I've mentioned to you before we've invested quite heavily there.
Chris: On consumer research to really understand how to better reach.
Chris: The total addressable market and <unk> been working on Brian's they'd probably the last year now on a complete.
Chris: Advertising and brand platform transition that.
Kristen Sieffert: That platform transition goes live at the, in Q2, and we'll be fully migrating away from kind of our legacy advertising campaigns into the new campaigns in the summer. So, by June, we'll be fully transitioned over. Once that happens, we see a tremendous amount of upside because, you know, historically, we've just really focused on kind of a DRTV approach. And in the more kind of modern approach to marketing, there's a lot of untapped opportunity for us. So, we see a huge amount of upside there to really optimize the amount of investment that we're making in marketing across the funnel.
Chris: Platform transition goes live.
Chris: In Q2 and will be fully migrating away from kind of our legacy advertising campaign.
Chris: <unk> agents.
Chris: In the summer so biogen will be fully transitioned over once that happens we see a tremendous amount.
Chris: Yes, historically, we just really focused on.
Chris: The <unk> approach and more.
Chris: Kind of modern approach to marketing there is a lot of untapped opportunity for us.
Chris: We see a huge amount of upside there and really optimize the amount of investments that we're making in marketing.
Chris: <unk>.
Stephen Laws: Fantastic. I appreciate the comments this afternoon and look forward to an exciting 2025.
Chris: Fantastic I appreciate the comments this afternoon and look forward to an exciting 2025. Thank you.
Doug Harter: Your next question comes from the line of Doug Harter with UPS.
Speaker Change: Your next question.
Chris: Okay.
Doug Harter: Please go ahead. I was just hoping you could give us an update on HECM 2.0 and the progress there given the new administration. Yeah, sure. The latest update I have for you on that is, you know, GINI continued to make progress on the operational side relative to the implementation of HMDS 2.0. They haven't yet communicated an effective date, although based upon our last conversations with them, as soon as they have, you know, the appointees in place, they do expect, you know, this to move forward. But at this point, I don't have an effective date, although I do know that they continue to make progress and work on the program.
Chris: Please go ahead.
Will Nasta: Hi, Thanks. This is actually will nasta on for Doug today.
Will Nasta: I was just hoping you could give us an update on how come to point on the progress there given the new administration.
Will Nasta: And pending changes that are around there. Thanks.
Will Nasta: Yes sure.
Will Nasta: The latest.
Will Nasta: The latest update I have for you on that is.
Will Nasta: Ginny continued to make progress on the operational side.
Will Nasta: Relative to the implementation of each MBS to Pune, they haven't yet communicated an effective date, although based upon our last conversations with them as soon as they have.
Will Nasta: The appointees in place they do expect.
Will Nasta: Just to move forward, but at this point they don't have an effective date, although I do know that they continue to make progress and work on the program I think the last piece that.
Doug Harter: I think the last piece that is outstanding is just when it will go live. So that's the latest update that we have. I'm sorry I don't have more clarity around the rollout date for you.
Will Nasta: This outstanding is just when you will go lives.
Will Nasta: That still leaves us some things that we have certainty.
Will Nasta: Or clarity around the rule in Detroit.
Doug Harter: That was great, thank you.
Will Nasta: Okay, great. Thank you.
Celine: That concludes our Q&A session.
Will Nasta: That concludes the Q&A session and then I'll turn the conference back.
Graham Fleming: I will now turn the conference back to Graham Fleming for closing remarks. Please go ahead. Yeah, thank you very much everybody for joining us for our Q4, for your 2024 call, and I look forward to updating everybody in May on our Q1 progress. Thank you very much.
Will Nasta: Let me quick closing remarks. Please go ahead.
Will Nasta: Thank you very much everybody for joining us for our Q4 full year 2024 call and I look forward to updating everybody in Q1 our.
Will Nasta: Q1 progress thank you very much.
Celine: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Will Nasta: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Will Nasta: Okay.
Will Nasta: Okay.
Will Nasta: Sure.
Will Nasta: Okay.
Will Nasta: Okay.