Equity and Earnings per Share (Tables)
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9 Months Ended |
Sep. 30, 2022 |
Equity [Abstract] |
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Warrants |
At September 30, 2022, Sunlight has authorized Class A Shares to cover the exercise of the following outstanding warrants on its equity:
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Type |
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Date of Issuance |
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Exercise Price per Share |
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Shares |
Public Warrants |
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Nov-20 |
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$ |
11.50 |
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17,250,000 |
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Private Placement Warrants |
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Nov-20 |
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11.50 |
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9,900,000 |
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Other |
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Feb-21 |
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7.72 |
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627,780 |
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Schedule of Repurchase of Class A Common Shares |
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Successor |
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Predecessor |
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Successor |
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Predecessor |
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For the Three Months Ended September 30, 2022 |
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For the Period July 10, 2021 to September 30, 2021 |
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For the Period July 1, 2021 to July 9, 2021 |
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For the Nine Months Ended September 30, 2022 |
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For the Period January 1, 2021 to July 9, 2021 |
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Amount paid |
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$ |
8,448 |
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$ |
— |
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$ |
— |
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$ |
10,452 |
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$ |
— |
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Common Class A shares repurchased |
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2,591,027 |
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— |
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— |
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3,036,259 |
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— |
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Price paid per common Class A share |
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$ |
3.26 |
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n.a. |
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n.a. |
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$ |
3.44 |
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n.a. |
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Temporary equity activities |
Activities related to interests in Sunlight Financial LLC’s partnership equity units considered temporary equity were as follows:
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Month of Issuance |
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Class A-3 Units |
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Class A-2 Units |
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Class A-1 Units |
Units at December 31, 2020 (Predecessor) |
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376,395 |
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225,972 |
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296,302 |
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March 2021 |
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13,457 |
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8,079 |
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10,593 |
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June 2021 |
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14,094 |
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8,461 |
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11,094 |
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July 2021 |
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1,444 |
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867 |
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1,137 |
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28,995 |
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17,407 |
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22,824 |
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Units at July 9, 2021 (Predecessor) |
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405,390 |
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243,379 |
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319,126 |
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Noncontrolling interest |
The Sunlight Financial LLC portion of noncontrolling interests is computed as follows:
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Successor |
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For the Three Months Ended September 30, |
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For the Period July 10, 2021 to September 30, 2021 |
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For the Nine Months Ended September 30, |
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2022 |
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2022 |
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Sunlight Financial LLC net income (loss) before income taxes |
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$ |
(422,434) |
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$ |
(26,115) |
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$ |
(442,692) |
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Sunlight Financial LLC as a percent of total(a)
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35.7 |
% |
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34.9 |
% |
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35.3 |
% |
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Sunlight Financial LLC net income (loss) attributable to the Class EX unitholders |
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$ |
(151,389) |
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$ |
(9,108) |
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$ |
(158,478) |
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a.Represents the weighted average percentage of total Sunlight shareholders' net income (loss) in Sunlight Financial LLC attributable to the Class EX unitholders.
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Summary of changes in ownership interest |
The following discloses the effects of changes in Sunlight's ownership interest in Sunlight Financial LLC on Sunlight's equity:
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Successor |
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For the Three Months Ended September 30, |
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For the Period July 10, 2021 to September 30, 2021 |
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For the Nine Months Ended September 30, |
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2022 |
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2022 |
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Transfers (to) from noncontrolling interests: |
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Decrease in Sunlight's shareholders' equity for the delivery of Class EX Units primarily in connection with vested provisionally-vested Class EX Units |
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$ |
(540) |
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$ |
— |
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$ |
(2,048) |
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Dilution impact of equity transactions |
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(540) |
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— |
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(2,048) |
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Net income (loss) attributable to Class A shareholders |
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(264,064) |
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(11,323) |
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(273,922) |
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Change from transfers (to) from noncontrolling interests and from net income (loss) attributable to Class A shareholders |
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$ |
(264,604) |
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$ |
(11,323) |
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$ |
(275,970) |
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Equity based compensation - granted |
Sunlight has granted the following outstanding awards (“Compensation Awards”) to certain employees and members of Sunlight’s Board at September 30, 2022:
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Service (in Years)(b)
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Award Class(a)
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Minimum |
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Maximum |
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Awards(c)
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Provisionally-Vested Class A Shares |
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1.9 |
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3.6 |
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194,427 |
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Provisionally-Vested Class EX Units |
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1.9 |
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1.9 |
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309,180 |
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Director RSUs |
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1.0 |
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1.0 |
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200,228 |
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Employee RSUs(d)
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3.0 |
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4.0 |
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3,230,882 |
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3,934,717 |
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a.All awards subject solely to time-based vesting.
b.At time of grant.
c.Net of fully vested and forfeited awards.
d.Additionally, Sunlight granted $3.7 million of RSU awards that were outstanding at September 30, 2022 for which Sunlight accounts as liabilities and which vest over a period of 4 years from the date of grant. Sunlight will determine the number of awards granted based upon the traded price of its Class A Shares during 2022.
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Activities related to equity-based compensation |
Activities related to Sunlight’s equity-based compensation were as follows: Successor
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Provisionally-Vested |
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RSUs |
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Class A Shares |
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Class EX Units |
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Directors |
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Employees(a)
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Per Share |
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Shares |
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Per Unit |
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Units |
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Per Unit |
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Units |
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Per Unit |
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Units |
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December 31, 2021 (Successor) |
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$ |
9.46 |
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337,193 |
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$ |
9.46 |
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974,447 |
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$ |
9.46 |
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75,000 |
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$ |
8.97 |
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2,136,129 |
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Issued |
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— |
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— |
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5.04 |
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70,991 |
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4.37 |
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200,228 |
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3.61 |
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2,010,907 |
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Vested |
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9.46 |
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(111,851) |
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8.91 |
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(573,329) |
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9.46 |
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(75,000) |
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9.46 |
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(424,997) |
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Forfeited or Cancelled |
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9.46 |
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(30,915) |
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9.46 |
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(162,929) |
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— |
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— |
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7.52 |
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(491,157) |
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September 30, 2022 (Successor) |
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9.46 |
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194,427 |
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9.46 |
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309,180 |
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4.37 |
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200,228 |
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5.63 |
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3,230,882 |
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a.During the nine months ended September 30, 2022, Sunlight also granted $12.3 million of RSU awards classified as liabilities, of which $1.6 million was forfeited and $7.4 million was reclassified as equity.
Predecessor
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Class C |
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LTIP |
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Per Unit |
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Units |
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Per Unit |
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Units |
December 31, 2020 (Predecessor) |
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$ |
14.51 |
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234,403 |
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$ |
20.06 |
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71,060 |
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Converted to Class C-1 Units |
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16.19 |
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(181) |
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18.96 |
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(377) |
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Converted to Class C-2 Units |
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11.12 |
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(1,513) |
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15.64 |
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(1,285) |
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July 9, 2021 (Predecessor) |
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14.53 |
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232,709 |
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20.14 |
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69,398 |
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Unrecognized compensation expense |
At September 30, 2022, Sunlight has not yet recognized compensation expense for the following awards, all of which are subject solely to time-based service vesting conditions:
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Type(a)
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Weighted Average Recognition Period |
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Awards |
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Amount |
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Provisionally-Vested Class A Shares |
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0.8 years |
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194,427 |
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$ |
1,839 |
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Provisionally-Vested Class EX Units |
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0.4 years |
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309,180 |
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3,795 |
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Director RSUs |
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0.3 years |
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200,228 |
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775 |
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Employee RSUs |
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1.5 years |
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3,230,882 |
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15,351 |
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3,934,717 |
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$ |
21,760 |
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a.In addition to the above, Sunlight has not yet recognized $0.1 million of compensation expense associated with employee subscriptions under Sunlight’s ESPP with a weighted-average recognition period of 0.2 years as well as $3.7 million of compensation expense associated with RSUs classified as liabilities with a weighted-average recognition period of 2 years.
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Earnings per share calculations |
The following table summarizes the basic and diluted earnings per share calculations:
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Successor |
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For the Three Months Ended September 30, |
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For the Period July 10, 2021 to September 30, 2021 |
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For the Nine Months Ended September 30, |
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2022 |
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2022 |
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Net Income (Loss) Per Class A Shareholders, Basic |
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Net income (loss) available to Class A shareholders |
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$ |
(262,719) |
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$ |
(11,216) |
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$ |
(273,811) |
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Total weighted average shares outstanding |
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83,049,291 |
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84,833,808 |
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84,157,718 |
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Net Income (Loss) Per Class A Shareholders, Basic |
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$ |
(3.16) |
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$ |
(0.13) |
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$ |
(3.25) |
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Net Income (Loss) Per Class A Shareholders, Diluted |
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Net income (loss) available to Class A shareholders |
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$ |
(262,719) |
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$ |
(20,140) |
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$ |
(273,811) |
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Total weighted average shares outstanding |
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83,049,291 |
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131,088,438 |
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84,157,718 |
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Net Income (Loss) Per Class A Shareholders, Diluted |
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$ |
(3.16) |
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$ |
(0.15) |
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$ |
(3.25) |
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Net income (loss) available to Class A shareholders |
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Net Income (Loss) |
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$ |
(415,453) |
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$ |
(20,431) |
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$ |
(432,400) |
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Noncontrolling interests in loss of consolidated subsidiaries |
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151,389 |
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9,108 |
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158,478 |
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Other weighting adjustments |
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1,345 |
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|
107 |
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|
111 |
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Net Income (Loss) Attributable to Class A Shareholders |
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(262,719) |
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$ |
(11,216) |
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(273,811) |
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Noncontrolling interests in income (loss) of Sunlight Financial LLC, net of assumed corporate income taxes at enacted rates, attributable to Class EX units exchangeable into Sunlight Financial Holdings Inc. Class A shares(a)
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— |
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(8,924) |
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— |
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Net income (loss) available to Class A shareholders, diluted |
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$ |
(262,719) |
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$ |
(20,140) |
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$ |
(273,811) |
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Weighted Average Units Outstanding |
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Class A shares outstanding |
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83,049,291 |
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84,833,808 |
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84,157,718 |
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Class EX units exchangeable into Sunlight Financial Holdings Inc. Class A shares(a)
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— |
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46,254,630 |
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— |
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Incremental Class A Shares attributable to dilutive effect of warrants(b)
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— |
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— |
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— |
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Class A restricted share units granted to employees and directors (eligible for dividend and dividend equivalent payments)(c)
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— |
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— |
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— |
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Total weighted average shares outstanding, diluted |
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83,049,291 |
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131,088,438 |
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84,157,718 |
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a.The Class EX Units not held by Sunlight (that is, those held by noncontrolling interests) are exchangeable into Class A Shares on a one-to-one basis. These units are not included in the computation of basic earnings per share. These units enter into the computation of diluted net
income (loss) per Class A Share when the effect is dilutive using the if-converted method. To the extent charges, particularly tax related charges, are incurred by Sunlight Financial Holdings Inc., the effect may be anti-dilutive.
b.Sunlight uses the treasury stock method to determine the dilutive effect, if any, of warrants exercisable in Sunlight’s Class A Shares. Such warrants were out-of-the-money during the nine months ended September 30, 2022.
c.Restricted Class A share units granted to directors and employees are eligible to receive dividend or dividend equivalent payments when dividends are declared and paid on Sunlight’s Class A Shares and therefore participate fully in the results of Sunlight’s operations from the date they are granted.
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Potential common shares excluded from diluted loss per common share |
The following table summarizes the weighted-average potential common shares excluded from diluted income (loss) per common share as their effect would be anti-dilutive:
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|
|
Successor |
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
|
For the Period July 10, 2021 to September 30, 2021 |
|
|
|
For the Nine Months Ended September 30, |
|
|
Common Shares From |
|
2022 |
|
|
|
|
2022 |
|
|
Class EX Units |
|
46,976,713 |
|
|
— |
|
|
|
|
46,803,950 |
|
|
|
Warrants(a)
|
|
27,150,000 |
|
|
27,150,000 |
|
|
|
|
27,150,000 |
|
|
|
Other warrants |
|
627,780 |
|
|
627,780 |
|
|
|
|
627,780 |
|
|
|
Unvested Class EX Units |
|
618,742 |
|
|
1,340,825 |
|
|
|
|
791,505 |
|
|
|
RSUs(b)
|
|
2,372,747 |
|
|
1,849,355 |
|
|
|
|
2,129,222 |
|
|
|
ESPP(c)
|
|
38,661 |
|
|
— |
|
|
|
|
107,716 |
|
|
|
|
|
77,784,643 |
|
|
30,967,960 |
|
|
|
|
77,610,173 |
|
|
|
a.Includes Public Warrants and Private Placement Warrants.
b.Includes RSUs awards to directors and employees.
c.Class A Shares deliverable to employees in satisfaction of subscriptions under Sunlight’s ESPP.
|