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Offerpad Announces Record Fourth Quarter Results; Reports 95% Increase in Full-Year Revenue to $2.07 Billion, Positive Net Income and Adjusted EBITDA

02/23/2022

Exceeded Fourth Quarter and Full-Year Expectations 

Fourth-Quarter 2021 Financial Highlights – compared with the prior-year fourth quarter:

  • Revenue increased 289% to $867.5 million
  • Gross profit increased 178% to $70.3 million
  • Earnings per share increased to $0.05 on Net Income of $12.8 million; includes a $0.06 per share benefit from the mark to market of warrants
  • Adjusted EBITDA increased 420% to $7.7 million

Offerpad Solutions Inc. (“Offerpad,” the “Company,” “we” or “our”) (NYSE: OPAD), a leading tech-enabled platform for buying and selling residential real estate, today released financial results for the three months ended and year ended December 31, 2021.

Brian Bair also noted that “Offerpad’s agility enables a dynamic model that adjusts to changes inherent in the real estate industry. Our leadership team understands the market and has decades of experience, creating confidence in the sustainability of our long-term growth and a path to consistent profitability.” (Graphic: Business Wire)

Brian Bair also noted that “Offerpad’s agility enables a dynamic model that adjusts to changes inherent in the real estate industry. Our leadership team understands the market and has decades of experience, creating confidence in the sustainability of our long-term growth and a path to consistent profitability.” (Graphic: Business Wire)

“We finished the quarter with record results capping off a remarkable year,” said Brian Bair, Chairman and CEO of Offerpad. “We exceeded our growth targets and financial expectations as demand for our services continues to grow. Our team successfully delivered a personal and customized experience to thousands of customers in 2021, earning us a 93%1 customer satisfaction rating. Customers recognize the benefits Offerpad brings to their real estate experience, and our exceptional results highlight the value of our customer-centric approach.”

Operational Highlights for 2021 include:

  • Doubling the team to over 1,000 employees, highlighting Offerpad as a desirable workplace where innovation and creativity are redefining residential real estate;
  • Setting a new record by completing over 8,000 home renovations, increasing the supply of upgraded and move-in ready homes;
  • Increasing acquisitions by 156%; and
  • Maintaining an average time from acquisition to sale below its 100-day target.

______________________

1 Based on over 3,600 customer surveys conducted in 2021.

Q4 2021 Financial Highlights

 

Q4 2021

Q4 2020

Percentage Change

Homes acquired

3,049

1,032

195%

Homes sold

2,423

849

185%

Revenue

$867.5M

$223.2M

289%

Gross profit

$70.3M

$25.3M

178%

Net income/(loss) (reported)1

$12.8M

($1.3M)

N.A.

Adjusted Net loss

($2.8M)

($1.3M)

(115%)

Adjusted EBITDA

$7.7M

$1.5M

420%

Contribution profit after interest per home sold

$18,400

$20,700

(11%)

1 Includes $15.6 million non-cash credit in Q4 2021 to mark to market the Warrant Liability.

Full Year 2021 Financial Highlights

 

2021

2020

Percentage Change

Homes acquired

9,023

3,519

156%

Homes sold

6,373

4,281

49%

Revenue

$2.07B

$1.06B

95%

Gross profit

$207.8M

$87.8M

137%

Net income/(loss) (reported)1

$6.5M

($23.1M)

N.A.

Adjusted Net income/(loss)

$4.0M

($23.1M)

N.A.

Adjusted EBITDA

$29.9M

($8.2M)

N.A.

Contribution profit after interest per home sold

$22,900

$9,000

154%

1 Includes $2.5 million non-cash credit in 2021 to mark to market the Warrant Liability.

“Our rigorous, analytically driven underwriting practices and deep industry expertise again demonstrated our ability to provide attractive offers to homeowners in a fiscally responsible manner,” said Mike Burnett, CFO of Offerpad. “While nearly doubling our revenue in 2021 to over $2 billion and generating positive net income, we demonstrated our ability to effectively adapt and execute this business model even in a rapidly changing and unpredictable business climate.”

Brian Bair noted that “Offerpad’s agility enables a dynamic model that adjusts to changes inherent in the real estate industry. Our leadership team understands the market and has decades of experience, creating confidence in the sustainability of our long-term growth and a path to consistent profitability.”

Additional information regarding Offerpad’s fourth quarter and full-year 2021 financial results and management commentary can be found by accessing the Company’s Quarterly Letter to Shareholders on the Offerpad investor relations website.

First Quarter 2022 Outlook

“We’re excited to build on our positive momentum in 2022 with the continuing strength of the residential real estate market, increasing consumer adoption, and our industry leading operational execution,” said Bair. Offerpad is providing its first quarter outlook for 2022 as follows:

 

Q1 2022 Outlook

Homes Sold

3,000 – 3,150

Revenue

$1.1B ­– $1.15B

Adjusted EBITDA1

$20M – $26M

1 See Non-GAAP financial measures below for an explanation of why a reconciliation of this guidance cannot be provided.

Conference Call and Webcast Details

Offerpad Chairman and CEO Brian Bair and CFO Mike Burnett will host a conference call and accompanying webcast on Feb. 23, 2022, at 5 p.m. EST. The webcast can be accessed on Offerpad’s Investor Relations website at https://investor.offerpad.com/events-and-presentations. Participants can register here to receive a personalized dial in number and PIN. Access to a replay of the webcast will be available from the same website address shortly after the live webcast concludes.

About Offerpad

Offerpad’s mission is to provide your best way to buy and sell a home. Period. We use technology-enabled solutions to remake the home selling and buying experience by offering customers the convenience, control and certainty to solve their housing needs. We combine our fundamental real estate expertise with our data-driven digital “Solutions Center” platform to give users a holistic, customer-centric experience, enabling them to efficiently sell and buy their homes online with streamlined access to other services including mortgage, listing, and buyer representation services. Visit Offerpad.com for more information.

#OPAD_IR

Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Offerpad’s future financial or operating performance. For example, statements regarding Offerpad’s financial outlook for first quarter 2022, expectations regarding profitability and anticipated growth in the industry in which Offerpad operates are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “pro forma,” “may,” “should,” “could,” “might,” “plan,” “possible,” “project,” “strive,” “budget,” “forecast,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that may impact such forward-looking statements include, but are not limited to, Offerpad’s ability to respond to general economic conditions; the health of the U.S. residential real estate industry; Offerpad’s ability to grow market share in its existing markets or any new markets it may enter; the impact of the COVID-19 pandemic; Offerpad’s ability to manage its growth effectively; Offerpad’s ability to accurately value and manage inventory, and to maintain an adequate and desirable supply of inventory; Offerpad’s ability to successfully launch new product and service offerings, and to manage, develop and refine its technology platform; Offerpad’s ability to maintain and enhance its products and brand, and to attract customers; Offerpad’s ability to achieve and maintain profitability in the future; and the success of strategic relationships with third parties. These and other important factors discussed under the caption "Risk Factors" in Offerpad’s Quarterly Report on Form 10-Q for the three months ended September 30, 2021 filed with the Securities and Exchange Commission on November 10, 2021, and Offerpad’s other reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by Offerpad and its management, are inherently uncertain. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Offerpad undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

OFFERPAD SOLUTIONS INC.

Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

 

Year Ended

 

 

 

December 31,

 

 

December 31,

 

(in thousands, except per share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

867,540

 

 

$

223,230

 

 

$

2,070,446

 

 

$

1,064,257

 

Cost of revenue

 

 

797,248

 

 

 

197,975

 

 

 

1,862,631

 

 

 

976,478

 

Gross profit

 

 

70,292

 

 

 

25,255

 

 

 

207,815

 

 

 

87,779

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales, marketing and operating

 

 

51,474

 

 

 

17,738

 

 

 

146,872

 

 

 

76,786

 

General and administrative

 

 

12,286

 

 

 

5,277

 

 

 

30,317

 

 

 

17,481

 

Technology and development

 

 

3,197

 

 

 

1,816

 

 

 

10,860

 

 

 

7,270

 

Total operating expenses

 

 

66,957

 

 

 

24,831

 

 

 

188,049

 

 

 

101,537

 

Income (loss) from operations

 

 

3,335

 

 

 

424

 

 

 

19,766

 

 

 

(13,758

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value of warrant liabilities

 

 

15,649

 

 

 

 

 

 

2,464

 

 

 

 

Interest expense

 

 

(6,178

)

 

 

(1,627

)

 

 

(15,848

)

 

 

(10,031

)

Other income, net

 

 

 

 

 

47

 

 

 

248

 

 

 

834

 

Total other income (expense)

 

 

9,471

 

 

 

(1,580

)

 

 

(13,136

)

 

 

(9,197

)

Income (loss) before income taxes

 

 

12,806

 

 

 

(1,156

)

 

 

6,630

 

 

 

(22,955

)

Income tax expense

 

 

 

 

 

(163

)

 

 

(170

)

 

 

(163

)

Net income (loss)

 

$

12,806

 

 

$

(1,319

)

 

$

6,460

 

 

$

(23,118

)

Net income (loss) per share, basic

 

$

0.05

 

 

$

(0.02

)

 

$

0.05

 

 

$

(0.40

)

Net income (loss) per share, diluted

 

$

0.05

 

 

$

(0.02

)

 

$

0.05

 

 

$

(0.40

)

Weighted average common shares outstanding, basic

 

 

238,395

 

 

 

57,865

 

 

 

118,571

 

 

 

57,865

 

Weighted average common shares outstanding, diluted

 

 

261,897

 

 

 

57,865

 

 

 

143,220

 

 

 

57,865

 

 
 

OFFERPAD SOLUTIONS INC.

Consolidated Balance Sheets

(Unaudited)

 

 

 

 

As of December 31,

 

(in thousands, except par value per share)

 

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

$

169,817

 

 

$

43,938

 

Restricted cash

 

 

 

 

24,616

 

 

 

6,804

 

Accounts receivable

 

 

 

 

6,165

 

 

 

2,309

 

Inventory

 

 

 

 

1,132,571

 

 

 

171,359

 

Prepaid expenses and other current assets

 

 

 

 

9,808

 

 

 

2,880

 

Total current assets

 

 

 

 

1,342,977

 

 

 

227,290

 

Property and equipment, net

 

 

 

 

5,146

 

 

 

8,231

 

Other non-current assets

 

 

 

 

4,959

 

 

 

352

 

TOTAL ASSETS

 

 

 

$

1,353,082

 

 

$

235,873

 

LIABILITIES, TEMPORARY EQUITY, AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

 

$

6,399

 

 

$

2,149

 

Accrued and other current liabilities

 

 

 

 

35,027

 

 

 

11,181

 

Secured credit facilities and notes payable, net

 

 

 

 

861,762

 

 

 

50,143

 

Secured credit facilities and notes payable - related party

 

 

 

 

164,434

 

 

 

126,825

 

Total current liabilities

 

 

 

 

1,067,622

 

 

 

190,298

 

Secured credit facilities and notes payable, net of current portion

 

 

 

 

 

 

 

4,710

 

Warrant liabilities

 

 

 

 

24,061

 

 

 

 

Other long-term liabilities

 

 

 

 

3,830

 

 

 

 

Total liabilities

 

 

 

 

1,095,513

 

 

 

195,008

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Temporary equity:

 

 

 

 

 

 

 

 

Series A convertible preferred stock, zero and 21,011 shares authorized, respectively; zero and 20,907 shares issued and outstanding, respectively; liquidation preference of $0 and $15,099, respectively

 

 

 

 

 

 

 

14,921

 

Series A-1 convertible preferred stock, zero and 10,905 shares authorized, issued and outstanding, respectively; liquidation preference of $0 and $7,500, respectively

 

 

 

 

 

 

 

7,470

 

Series A-2 convertible preferred stock, zero and 8,322 shares authorized, issued and outstanding, respectively; liquidation preference of $0 and $7,500, respectively

 

 

 

 

 

 

 

7,463

 

Series B convertible preferred stock, zero and 58,390 shares authorized, issued and outstanding, respectively; liquidation preference of $0 and $50,000, respectively

 

 

 

 

 

 

 

49,845

 

Series C convertible preferred stock, zero and 56,716 shares authorized, respectively; zero and 39,985 shares issued and outstanding, respectively; liquidation preference of $0 and $105,750, respectively

 

 

 

 

 

 

 

104,424

 

Total temporary equity

 

 

 

 

 

 

 

184,123

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Class A common stock, $0.0001 and $0.00001 par value, respectively; 2,000,000 and 256,694 shares authorized, respectively; 224,154 and 57,865 shares issued and outstanding, respectively

 

 

 

 

22

 

 

 

 

Class B common stock, $0.0001 and zero par value, respectively; 20,000 and zero shares authorized, respectively; 14,816 and zero shares issued and outstanding, respectively

 

 

 

 

2

 

 

 

 

Additional paid in capital

 

 

 

 

389,601

 

 

 

5,908

 

Accumulated deficit

 

 

 

 

(132,056

)

 

 

(138,516

)

Treasury stock

 

 

 

 

 

 

 

(10,650

)

Total stockholders’ equity (deficit)

 

 

 

 

257,569

 

 

 

(143,258

)

TOTAL LIABILITIES, TEMPORARY EQUITY, AND STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

$

1,353,082

 

 

$

235,873

 

 

OFFERPAD SOLUTIONS INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Year Ended December 31,

($ in thousands)

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

6,460

 

 

$

(23,118

)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

523

 

 

 

434

 

Gain on sale of property and equipment

 

 

(246

)

 

 

 

Amortization of debt financing costs

 

 

916

 

 

 

262

 

Impairment of inventory

 

 

2,843

 

 

 

3,170

 

Stock-based compensation

 

 

3,079

 

 

 

1,363

 

Change in fair value of warrant liabilities

 

 

(2,464

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(3,845

)

 

 

937

 

Inventory

 

 

(949,591

)

 

 

169,079

 

Prepaid expenses and other assets

 

 

(5,288

)

 

 

115

 

Accounts payable

 

 

4,130

 

 

 

841

 

Accrued and other liabilities

 

 

21,563

 

 

 

1,781

 

Net cash (used in) provided by operating activities

 

 

(921,920

)

 

 

154,864

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(13,687

)

 

 

(2,858

)

Proceeds from sales of property and equipment

 

 

2,032

 

 

 

 

Net cash used in investing activities

 

 

(11,655

)

 

 

(2,858

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from Business Combination

 

 

284,011

 

 

 

 

Issuance cost of common stock

 

 

(51,249

)

 

 

 

Borrowings from credit facilities and notes payable

 

 

2,764,071

 

 

 

799,997

 

Repayments of credit facilities and notes payable

 

 

(1,912,837

)

 

 

(960,510

)

Payment of debt financing costs

 

 

(7,632

)

 

 

(457

)

Proceeds from exercise of stock options

 

 

902

 

 

 

 

Proceeds from issuance of Class C preferred stock, net

 

 

 

 

 

29,823

 

Repurchase of common stock

 

 

 

 

 

 

Net cash provided by (used in) financing activities

 

 

1,077,266

 

 

 

(131,147

)

Net change in cash, cash equivalents and restricted cash

 

 

143,691

 

 

 

20,859

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

50,742

 

 

 

29,883

 

Cash, cash equivalents and restricted cash, end of period

 

$

194,433

 

 

$

50,742

 

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:

 

 

 

 

 

 

Cash and cash equivalents

 

$

169,817

 

 

$

43,938

 

Restricted cash

 

 

24,616

 

 

 

6,804

 

Total cash, cash equivalents and restricted cash

 

$

194,433

 

 

$

50,742

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash payments for interest

 

$

21,875

 

 

$

14,048

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Transfer of property and equipment, net to inventory

 

$

14,464

 

 

$

 

Acquisition of warrant liabilities

 

$

26,525

 

 

$

 

Conversion of preferred stock to common stock

 

$

184,123

 

 

$

 

Conversion of treasury stock

 

$

10,650

 

 

$

 

 

Non-GAAP Financial Measures

In addition to Offerpad’s results of operations above, Offerpad reports certain financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles (“GAAP”). These measures have limitations as analytical tools when assessing Offerpad’s operating performance and should not be considered in isolation or as a substitute for GAAP measures, including gross profit and net income.

Offerpad may calculate or present their non-GAAP financial measures differently than other companies who report measures with similar titles and, as a result, the non-GAAP financial measures Offerpad reports may not be comparable with those of companies in Offerpad’s industry or in other industries. Offerpad has not provided a quantitative reconciliation of forecasted Adjusted EBITDA to forecasted net income (loss) within this press release because Offerpad is unable to calculate certain reconciling items without making unreasonable efforts. These items, which include, but are not limited to, stock-based compensation with respect to future grants and forfeitures, could materially affect the computation of forward-looking net income (loss), are inherently uncertain and depend on various factors, some of which are outside of Offerpad’s control.

Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins)

To provide investors with additional information regarding Offerpad’s margins, Offerpad has included Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest (and related margins), which are non-GAAP financial measures. Offerpad believes that Adjusted Gross Profit, Contribution Profit, and Contribution Profit After Interest are useful financial measures for investors as they are used by management in evaluating unit level economics and operating performance across Offerpad’s markets. Each of these measures is intended to present the economics related to homes sold during a given period. Offerpad does so by including revenue generated from homes sold (and ancillary services) in the period and only the expenses that are directly attributable to such home sales, even if such expenses were recognized in prior periods, and excluding expenses related to homes that remain in inventory as of the end of the period presented. Contribution Profit provides investors a measure to assess Offerpad’s ability to generate returns on homes sold during a reporting period after considering home acquisition costs, renovation and repair costs, and adjusting for holding costs and selling costs. Contribution Profit After Interest further impacts gross profit by including interest costs (including senior and mezzanine secured credit facilities) attributable to homes sold during a reporting period. Offerpad believes these measures facilitate meaningful period over period comparisons and illustrate Offerpad’s ability to generate returns on assets sold after considering the costs directly related to the assets sold in a presented period.

Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest (and related margins) are supplemental measures of Offerpad’s operating performance and have limitations as analytical tools. For example, these measures include costs that were recorded in prior periods under GAAP and exclude, in connection with homes held in inventory at the end of the period, costs required to be recorded under GAAP in the same period.

Accordingly, these measures should not be considered in isolation or as a substitute for analysis of Offerpad’s results as reported under GAAP. Offerpad includes a reconciliation of these measures to the most directly comparable GAAP financial measure, which is gross profit.

Adjusted Gross Profit / Margin

Offerpad calculates Adjusted Gross Profit as gross profit under GAAP adjusted for (1) net inventory impairment plus (2) interest expense associated with homes sold in the presented period and recorded in cost of revenue. Net inventory impairment is calculated by adding back the inventory impairment charges recorded during the period on homes that remain in inventory at period end and subtracting the inventory impairment charges recorded in prior periods on homes sold in the current period. Offerpad defines Adjusted Gross Margin as Adjusted Gross Profit as a percentage of revenue.

Offerpad views this metric as an important measure of business performance, as it captures gross margin performance isolated to homes sold in a given period and provides comparability across reporting periods. Adjusted Gross Profit helps management assess performance across the key phases of processing a home (acquisitions, renovations, and resale) for a specific resale cohort.

Contribution Profit / Margin

Offerpad calculates Contribution Profit as Adjusted Gross Profit, minus (1) direct selling costs incurred on homes sold during the presented period, minus (2) holding costs incurred in the current period on homes sold during the period recorded in sales, marketing, and operating, minus (3) holding costs incurred in prior periods on homes sold in the current period recorded in sales, marketing, and operating, plus (4) other income which historically is primarily comprised of net income to us from the investment related to Offerpad Home Loans “OPHL” operations. The composition of Offerpad’s holding costs is described in the footnotes to the reconciliation table below. Offerpad defines Contribution Margin as Contribution Profit as a percentage of revenue.

Offerpad views this metric as an important measure of business performance as it captures the unit level performance isolated to homes sold in a given period and provides comparability across reporting periods. Contribution Profit helps management assess inflows and outflow directly associated with a specific resale cohort.

Contribution Profit / Margin After Interest

Offerpad defines Contribution Profit After Interest as Contribution Profit, minus (1) interest expense associated with homes sold in the presented period and recorded in cost of revenue, minus (2) interest expense associated with homes sold in the presented period, recorded in costs of sales, and previously excluded from Adjusted Gross Profit, and minus (3) interest expense under Offerpad’s senior and mezzanine secured credit facilities incurred on homes sold during the period. This includes interest expense recorded in prior periods in which the sale occurred. Offerpad’s senior and mezzanine secured credit facilities are secured by their homes in inventory and drawdowns are made on a per-home basis at the time of purchase and are required to be repaid at the time the homes are sold. Offerpad defines Contribution Margin After Interest as Contribution Profit After Interest as a percentage of revenue.

Offerpad views this metric as an important measure of business performance. Contribution Profit After Interest helps management assess Contribution Margin performance, per above, when fully burdened with costs of financing.

The following table presents a reconciliation of Offerpad’s Adjusted Gross Profit, Contribution Profit and Contribution Profit After Interest to Offerpad’s gross profit, which is the most directly comparable GAAP measure, for the periods indicated:

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands, except percentages and homes sold, unaudited)

2021

2020

2021

2020

Gross profit (GAAP)

$

70,292

 

$

25,254

 

$

207,815

 

$

87,779

 

Gross margin

 

8.1

%

 

11.3

%

 

10.0

%

 

8.2

%

Homes sold

 

2,423

 

 

849

 

 

6,373

 

 

4,281

 

Gross profit per home sold

$

29.0

 

$

29.7

 

$

32.6

 

$

20.5

 

Adjustments:
Inventory impairment - current period (1)

 

985

 

 

144

 

 

1,205

 

 

160

 

Inventory impairment - prior period (2)

 

(511

)

 

(46

)

 

(160

)

 

(842

)

Interest expense capitalized (3)

 

3,511

 

 

396

 

 

6,294

 

 

2,962

 

Adjusted gross profit

$

74,277

 

$

25,748

 

$

215,154

 

$

90,059

 

Adjusted gross margin

 

8.6

%

 

11.5

%

 

10.4

%

 

8.5

%

Adjustments:
Direct selling costs (4)

 

(19,894

)

 

(5,981

)

 

(48,066

)

 

(30,878

)

Holding costs on sales - current period (5)(6)

 

(1,339

)

 

(434

)

 

(4,262

)

 

(4,419

)

Holding costs on sales - prior period (5)(7)

 

(558

)

 

(158

)

 

(214

)

 

(1,393

)

Other income (8)

 

0

 

 

47

 

 

248

 

 

834

 

Contribution profit

$

52,486

 

$

19,221

 

$

162,860

 

$

54,203

 

Contribution margin

 

6.0

%

 

8.6

%

 

7.9

%

 

5.1

%

Homes sold

 

2,423

 

 

849

 

 

6,373

 

 

4,281

 

Contribution profit per home sold

$

21.7

 

$

22.6

 

$

25.6

 

$

12.7

 

Adjustments:
Interest expense capitalized (3)

 

(3,511

)

 

(396

)

 

(6,294

)

 

(2,962

)

Interest expense on homes sold - current period (9)

 

(2,575

)

 

(916

)

 

(10,228

)

 

(8,500

)

Interest expense on homes sold - prior period (10)

 

(1,749

)

 

(336

)

 

(468

)

 

(4,169

)

Contribution profit after interest

$

44,651

 

$

17,574

 

$

145,870

 

$

38,572

 

Contribution margin after interest

 

5.1

%

 

7.9

%

 

7.0

%

 

3.6

%

Homes sold

 

2,423

 

 

849

 

 

6,373

 

 

4,281

 

Contribution profit after interest per home sold

$

18.4

 

$

20.7

 

$

22.9

 

$

9.0

 

(1)

Inventory impairment – current period is the inventory valuation adjustments recorded during the period presented associated with homes that remain in inventory at period end.

(2)

Inventory impairment – prior period is the inventory valuation adjustments recorded in prior periods associated with homes that sold in the period presented.

(3)

Interest expense capitalized represents all interest related costs, including senior and mezzanine secured credit facilities, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

(4)

Direct selling costs represents selling costs incurred related to homes sold in the period presented. This primarily includes broker commissions and title and escrow closing fees.

(5)

Holding costs primarily include property taxes, insurance, utilities, homeowners association dues, cleaning and maintenance costs.

(6)

Represents holding costs incurred on homes sold in the period presented and expensed to Sales, marketing, and operating on the Consolidated Statements of Operations.

(7)

Represents holding costs incurred in prior periods on homes sold in the period presented and expensed to Sales, marketing, and operating on the Consolidated Statements of Operations.

(8)

Other income in 2021 was earned from the sale of certain fixed assets. In 2020, other income primarily consists of net income to Offerpad from Offerpad’s historical investment in OPHL.

(9)

Represents both senior and mezzanine interest expense incurred on homes sold in the period presented and expensed to Interest expense on the Consolidated Statements of Operations.

(10)

Represents both senior and mezzanine secured credit facilities interest expense incurred in prior periods on homes sold in the period presented and expensed to Interest expense on the Consolidated Statements of Operations.

 

Adjusted Net Income (Loss) and Adjusted EBITDA

Offerpad also presents Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP financial measures, which the management team uses to assess Offerpad’s underlying financial performance. Offerpad believes these measures provide insight into period over period performance, adjusted for non-recurring or non-cash items.

Offerpad calculates Adjusted Net Income (Loss) as GAAP net income (loss) adjusted for the change in fair value of warrant liabilities. Offerpad defines Adjusted Net Income (Loss) Margin as Adjusted Net Income (Loss) as a percentage of revenue.

Offerpad calculates Adjusted EBITDA as Adjusted Net Income (Loss) adjusted for interest expense, amortization of capitalized interest, taxes, depreciation and amortization and stock-based compensation expense. Offerpad defines Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue.

Adjusted Net Income (Loss) and Adjusted EBITDA are supplemental to Offerpad’s operating performance measures calculated in accordance with GAAP and have important limitations. For example, Adjusted Net Income (Loss) and Adjusted EBITDA exclude the impact of certain costs required to be recorded under GAAP and could differ substantially from similarly titled measures presented by other companies in Offerpad’s industry or companies in other industries. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of Offerpad’s results as reported under GAAP.

The following table presents a reconciliation of Offerpad’s Adjusted Net Income (Loss) and Adjusted EBITDA to their GAAP net income (loss), which is the most directly comparable GAAP measure, for the periods indicated:

Three Months Ended

December 31,

Year Ended

December 31,

(in thousands, except percentages, unaudited)

2021

2020

2021

2020

Net income (loss) (GAAP)

$

12,806

 

$

(1,319

)

$

6,460

 

$

(23,118

)

Change in fair value of warrant liability

 

(15,649

)

 

-

 

 

(2,464

)

 

-

 

Adjusted net (loss) income

$

(2,843

)

$

(1,319

)

$

3,996

 

$

(23,118

)

Adjusted net income margin

 

(0.3

%)

 

(0.6

%)

 

0.2

%

 

(2.2

%)

Adjustments:
Interest expense

 

6,178

 

 

1,627

 

 

15,848

 

 

10,031

 

Amortization of capitalized interest (1)

 

3,511

 

 

396

 

 

6,294

 

 

2,962

 

Income tax expense

 

-

 

 

163

 

 

170

 

 

163

 

Depreciation and amortization

 

90

 

 

126

 

 

523

 

 

434

 

Amortization of share based compensation

 

763

 

 

488

 

 

3,079

 

 

1,363

 

Adjusted EBITDA

 

7,699

 

 

1,482

 

 

29,910

 

 

(8,165

)

Adjusted EBITDA margin

 

0.9

%

 

0.7

%

 

1.4

%

 

(0.8

%)

(1)

Amortization of capitalized interest represents all interest related costs, including senior and mezzanine secured credit facilities, incurred on homes sold in the period presented that were capitalized and expensed in cost of sales at the time of sale.

 

Investors
Stefanie Layton
Investors@offerpad.com
602-706-4905

Media
Laura Collins
480-220-0021

David Stephan
951-970-6336
Press@Offerpad.com

Source: Offerpad

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Brian Bair also noted that “Offerpad’s agility enables a dynamic model that adjusts to changes inherent in the real estate industry. Our leadership team understands the market and has decades of experience, creating confidence in the sustainability of our long-term growth and a path to consistent profitability.” (Graphic: Business Wire) 2400 x 1200 jpg 2.31 MB
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