Equity and Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Warrants

At March 31, 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

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
Units at March 31, 2021 (Predecessor)	389,852	234,051	306,895

Noncontrolling interest

The Sunlight Financial LLC portion of noncontrolling interests is computed as follows:

	Successor
	For the Three Months Ended March 31,
	2022
Sunlight Financial LLC net income (loss) before income taxes	$	(24,617)
Sunlight Financial LLC as a percent of total(a)	35.1		%
Sunlight Financial LLC net income (loss) attributable to the Class EX unitholders	$	(8,632)

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 March 31,
	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	$	(394)
Dilution impact of equity transactions	(394)
Net income (loss) attributable to Class A shareholders	(13,974)
Change from transfers (to) from noncontrolling interests and from net income (loss) attributable to Class A shareholders	$	(14,368)

Equity based compensation - granted

Sunlight has granted the following outstanding awards (“Compensation Awards”) to certain employees and members of Sunlight’s Board at March 31, 2022:

	Service (in Years)(b)
Award Class(a)	Minimum	Maximum	Awards(c)
Provisionally-Vested Class A Shares	1.9	3.6	267,731
Provisionally-Vested Class EX Units	1.9	1.9	710,550
Director RSUs	1.0	1.0	75,000
Employee RSUs(d)	3.0	4.0	1,792,868
			2,846,149

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 $6.1 million of RSU awards that were outstanding at March 31, 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	—		—	—		—
Vested	9.46		(38,547)	9.46		(171,959)	—		—	—		—
Forfeited or Cancelled	9.46		(30,915)	9.46		(162,929)	—		—	9.22		(343,261)
March 31, 2022 (Successor)	9.46		267,731	9.02		710,550	9.46		75,000	8.92		1,792,868

a.During the three months ended March 31, 2022, Sunlight also granted $6.7 million.of RSU awards classified as liabilities, of which $0.6 million was forfeited.

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		(136)	18.80		(231)
Converted to Class C-2 Units	11.12		(756)	15.64		(639)
March 31, 2021 (Predecessor)	14.52		233,511	20.10		70,190

Unrecognized compensation expense

At March 31, 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	1.1 years	267,731	$	2,893
Provisionally-Vested Class EX Units	0.6 years	710,550	6,408
Director RSUs	0.2 years	75,000	192
Employee RSUs	1.5 years	1,792,868	12,849
		2,846,149	$	22,342

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 $5.9 million of compensation expense associated with RSUs classified as liabilities with a weighted-average recognition period of 2.0 years.

Earnings per share calculations

The following table summarizes the basic and diluted earnings per share calculations:

	Successor
	For the Three Months Ended March 31,
	2022
Net Income (Loss) Per Class A Shareholders, Basic
Net income (loss) available to Class A shareholders	$	(13,756)
Total weighted average shares outstanding	84,798,918
Net Income (Loss) Per Class A Shareholders, Basic	$	(0.16)
Net Income (Loss) Per Class A Shareholders, Diluted
Net income (loss) available to Class A shareholders	$	(13,756)
Total weighted average shares outstanding	84,798,918
Net Income (Loss) Per Class A Shareholders, Diluted	$	(0.16)
Net income (loss) available to Class A shareholders
Net Income (Loss)	$	(22,606)
Noncontrolling interests in loss of consolidated subsidiaries	8,632
Other weighting adjustments	218
Net Income (Loss) Attributable to Class A Shareholders	(13,756)
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)	—
Net income (loss) available to Class A shareholders, diluted	$	(13,756)
Weighted Average Units Outstanding
Class A shares outstanding	84,798,918
Class EX units exchangeable into Sunlight Financial Holdings Inc. Class A shares(a)	—
Incremental Class A Shares attributable to dilutive effect of warrants(b)	—
Total weighted average shares outstanding, diluted	84,798,918

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 three months ended March 31, 2022.

Potential common shares excluded from diluted loss per common share

The following table summarizes the weighted-average potential common shares excluded from diluted loss per common share as their effect would be anti-dilutive:

	Successor
	For the Three Months Ended March 31,
Common Shares From	2022
Class EX Units	46,628,474
Warrants(a)	27,150,000
Other warrants	627,780
Unvested Class EX Units	966,981
RSUs(b)	1,904,217
ESPP(c)	4,355
	77,281,807

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.