Quarterly report pursuant to Section 13 or 15(d)

Equity and Earnings per Share (Tables)

v3.22.2.2
Equity and Earnings per Share (Tables)
 9 Months Ended
Sep. 30, 2022
Equity [Abstract]  
Warrants At September 30, 2022, Sunlight has authorized Class A Shares to cover the exercise of the following outstanding warrants on its equity:
Type Date of Issuance Exercise Price per Share Shares
Public Warrants Nov-20 $ 11.50  17,250,000 
Private Placement Warrants Nov-20 11.50  9,900,000 
Other Feb-21 7.72  627,780 
Schedule of Repurchase of Class A Common Shares
Successor Predecessor Successor Predecessor
For the Three Months Ended September 30, 2022 For the Period July 10, 2021 to September 30, 2021 For the Period July 1, 2021 to July 9, 2021 For the Nine Months Ended September 30, 2022 For the Period January 1, 2021 to July 9, 2021
Amount paid $ 8,448  $ —  $ —  $ 10,452  $ — 
Common Class A shares repurchased 2,591,027  —  —  3,036,259  — 
Price paid per common Class A share $ 3.26  n.a. n.a. $ 3.44  n.a.
Temporary equity activities Activities related to interests in Sunlight Financial LLC’s partnership equity units considered temporary equity were as follows:
Month of Issuance Class A-3 Units Class A-2 Units Class A-1 Units
Units at December 31, 2020 (Predecessor) 376,395  225,972  296,302 
March 2021 13,457  8,079  10,593 
June 2021 14,094  8,461  11,094 
July 2021 1,444  867  1,137 
28,995  17,407  22,824 
Units at July 9, 2021 (Predecessor) 405,390  243,379  319,126 
Noncontrolling interest The Sunlight Financial LLC portion of noncontrolling interests is computed as follows:
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,
2022 2022
Sunlight Financial LLC net income (loss) before income taxes $ (422,434) $ (26,115) $ (442,692)
Sunlight Financial LLC as a percent of total(a)
35.7  % 34.9  % 35.3  %
Sunlight Financial LLC net income (loss) attributable to the Class EX unitholders $ (151,389) $ (9,108) $ (158,478)
a.Represents the weighted average percentage of total Sunlight shareholders' net income (loss) in Sunlight Financial LLC attributable to the Class EX unitholders.
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:
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,
2022 2022
Transfers (to) from noncontrolling interests:
Decrease in Sunlight's shareholders' equity for the delivery of Class EX Units primarily in connection with vested provisionally-vested Class EX Units $ (540) $ —  $ (2,048)
Dilution impact of equity transactions (540) —  (2,048)
Net income (loss) attributable to Class A shareholders (264,064) (11,323) (273,922)
Change from transfers (to) from noncontrolling interests and from net income (loss) attributable to Class A shareholders $ (264,604) $ (11,323) $ (275,970)
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:

Service (in Years)(b)
Award Class(a)
Minimum Maximum
Awards(c)
Provisionally-Vested Class A Shares 1.9 3.6 194,427 
Provisionally-Vested Class EX Units 1.9 1.9 309,180 
Director RSUs 1.0 1.0 200,228 
Employee RSUs(d)
3.0 4.0 3,230,882 
3,934,717 
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.
Activities related to equity-based compensation Activities related to Sunlight’s equity-based compensation were as follows:
Successor
Provisionally-Vested RSUs
Class A Shares Class EX Units Directors
Employees(a)
Per Share Shares Per Unit Units Per Unit Units Per Unit Units
December 31, 2021 (Successor) $ 9.46  337,193  $ 9.46  974,447  $ 9.46  75,000  $ 8.97  2,136,129 
Issued —  —  5.04  70,991  4.37  200,228  3.61  2,010,907 
Vested 9.46  (111,851) 8.91  (573,329) 9.46  (75,000) 9.46  (424,997)
Forfeited or Cancelled 9.46  (30,915) 9.46  (162,929) —  —  7.52  (491,157)
September 30, 2022 (Successor) 9.46  194,427  9.46  309,180  4.37  200,228  5.63  3,230,882 
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
Class C LTIP
Per Unit Units Per Unit Units
December 31, 2020 (Predecessor) $ 14.51  234,403  $ 20.06  71,060 
Converted to Class C-1 Units 16.19  (181) 18.96  (377)
Converted to Class C-2 Units 11.12  (1,513) 15.64  (1,285)
July 9, 2021 (Predecessor) 14.53  232,709  20.14  69,398 
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:
Type(a)
Weighted Average Recognition Period Awards Amount
Provisionally-Vested Class A Shares 0.8 years 194,427  $ 1,839 
Provisionally-Vested Class EX Units 0.4 years 309,180  3,795 
Director RSUs 0.3 years 200,228  775 
Employee RSUs 1.5 years 3,230,882  15,351 
3,934,717  $ 21,760 
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.
Earnings per share calculations
The following table summarizes the basic and diluted earnings per share calculations:
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,
2022 2022
Net Income (Loss) Per Class A Shareholders, Basic
Net income (loss) available to Class A shareholders $ (262,719) $ (11,216) $ (273,811)
Total weighted average shares outstanding 83,049,291 84,833,808 84,157,718
Net Income (Loss) Per Class A Shareholders, Basic $ (3.16) $ (0.13) $ (3.25)
Net Income (Loss) Per Class A Shareholders, Diluted
Net income (loss) available to Class A shareholders $ (262,719) $ (20,140) $ (273,811)
Total weighted average shares outstanding 83,049,291 131,088,438 84,157,718
Net Income (Loss) Per Class A Shareholders, Diluted $ (3.16) $ (0.15) $ (3.25)
Net income (loss) available to Class A shareholders
Net Income (Loss) $ (415,453) $ (20,431) $ (432,400)
Noncontrolling interests in loss of consolidated subsidiaries 151,389  9,108  158,478 
Other weighting adjustments 1,345  107  111 
Net Income (Loss) Attributable to Class A Shareholders (262,719) $ (11,216) (273,811)
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)
—  (8,924) — 
Net income (loss) available to Class A shareholders, diluted $ (262,719) $ (20,140) $ (273,811)
Weighted Average Units Outstanding
Class A shares outstanding 83,049,291 84,833,808 84,157,718
Class EX units exchangeable into Sunlight Financial Holdings Inc. Class A shares(a)
— 46,254,630 —
Incremental Class A Shares attributable to dilutive effect of warrants(b)
— — —
Class A restricted share units granted to employees and directors (eligible for dividend and dividend equivalent payments)(c)
— — —
Total weighted average shares outstanding, diluted 83,049,291 131,088,438 84,157,718
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.
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:
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.