Equity and Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2023

At June 30, 2023, 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
Bank Partner Warrants(a)	Apr-23		0.01			25,944,541
Other	Feb-21	7.72			627,780

a.Includes 15,258,098 shares immediately-exercisable and 10,686,443 shares contingently-exercisable at June 30, 2023.

Summary of Share Repurchase Program

Sunlight repurchased the following Class A common shares:




	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022			2023		2022
Amount paid	$	—	$	2,004		$	—	$	2,004
Common Class A shares repurchased	—		445,232			—		445,232
Price paid per common Class A share	n.a.		$	4.50		n.a.		$	4.50

Summary of Noncontrolling Interest

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




	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2023			2022			2023			2022
Sunlight Financial LLC net income (loss) before income taxes	$	(82,800)		$	4,359		$	(117,312)		$	(20,258)
Sunlight Financial LLC as a percent of total(a)	34.4		%	35.2		%	34.5		%	35.1		%
Sunlight Financial LLC net income (loss) attributable to the Class EX unitholders	$	(28,487)		$	1,543		$	(40,349)		$	(7,089)

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:




	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Transfers (to) from noncontrolling interests:
Increase (Decrease) in Sunlight's shareholders' equity for the delivery of Class EX Units	$	1,222	$	(1,114)	$	(6,266)	$	(1,508)
Increase in Sunlight's shareholders' equity for the exchange of Class EX Units for Class A Shares	—		—		6,622		—
Dilution impact of equity transactions	1,222		(1,114)		356		(1,508)
Net income (loss) attributable to Class A shareholders	(54,657)		4,116		(77,604)		(9,858)
Change from transfers (to) from noncontrolling interests and from net income (loss) attributable to Class A shareholders	$	(53,435)	$	3,002	$	(77,248)	$	(11,366)

Summary of Equity Based Compensation - Granted

Sunlight has granted the following outstanding awards (“Compensation Awards”) to certain employees and members of Sunlight’s Board at June 30, 2023:


	Service (in Years)(b)
Award Class(a)	Minimum	Maximum	Awards(c)
Provisionally-Vested Class A Shares	1.9	3.6	78,188


Employee RSUs	3.0	4.0	4,059,259

			4,137,447

a.All awards subject solely to time-based vesting.

b.At time of grant.

c.Net of fully vested and forfeited awards.

Summary of Activities Related to Equity-Based Compensation

Activities related to Sunlight’s equity-based compensation were as follows:


	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, 2022	$	9.46	145,970	$	9.46	189,158	$	4.37	171,624	$	3.97	5,703,195
Issued	—		—	—		—	—		—	—		—
Vested	9.46		(63,221)	9.46		(189,158)	4.37		(171,624)	1.55		(1,058,653)
Forfeited or Cancelled	9.46		(4,561)	—		—	—		—	3.82		(585,283)
June 30, 2023	9.46		78,188	—		—	—		—	4.38		4,059,259

December 31, 2021	$	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	4.17		880,410
Vested	9.46		(74,998)	9.46		(345,833)	—		—	—		—
Forfeited or Cancelled	9.46		(30,915)	9.46		(162,929)	—		—	7.54		(420,937)
June 30, 2022	9.46		231,280	9.02		536,676	5.76		275,228	7.56		2,595,602

a.During the six months ended June 30, 2022, Sunlight also granted $11.5 million of RSU awards classified as liabilities, of which $0.6 million was forfeited and $3.7 million was reclassified as equity.

Summary of Unrecognized Compensation Expense

At June 30, 2023, Sunlight has not yet recognized compensation expense for the following awards, all of which are subject solely to time-based service vesting conditions:



Type	Weighted Average Recognition Period	Awards	Amount
Provisionally-Vested Class A Shares	0.6 years	78,188	$	740


Employee RSUs	1.1 years	4,059,259	9,897
		4,137,447	$	10,637

Summary of Earnings Per Share Calculations

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




	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Net Income (Loss) Per Class A Shareholders, Basic
Net income (loss) available to Class A shareholders	$	(54,547)	$	4,232	$	(77,358)	$	(9,483)
Total weighted average shares outstanding	95,751,483		84,635,413		90,367,223		84,717,117
Net Income (Loss) Per Class A Shareholders, Basic	$	(0.57)	$	0.05	$	(0.86)	$	(0.11)

Net Income (Loss) Per Class A Shareholders, Diluted
Net income (loss) available to Class A shareholders	$	(83,034)	$	4,232	$	(117,707)	$	(14,769)
Total weighted average shares outstanding	140,724,710		84,668,201		135,340,450		131,433,095
Net Income (Loss) Per Class A Shareholders, Diluted	$	(0.59)	$	0.05	$	(0.87)	$	(0.11)

Net income (loss) available to Class A shareholders
Net Income (Loss)	$	(83,144)	$	5,659	$	(117,953)	$	(16,947)
Noncontrolling interests in (income) loss of consolidated subsidiaries	28,487		(1,543)		40,349		7,089
Other weighting adjustments	110		116		246		375
Net Income (Loss) Attributable to Class A Shareholders	(54,547)		4,232		(77,358)		$	(9,483)



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)	(28,487)		—		(40,349)		(5,286)
Net income (loss) available to Class A shareholders, diluted	$	(83,034)	$	4,232	$	(117,707)	$	(14,769)

Weighted Average Units Outstanding
Class A shares outstanding	85,437,312		84,635,413		85,210,138		84,717,117

Fully vested affiliate warrants	10,314,171		—		5,157,085		—

Total weighted average shares outstanding, basic	95,751,483		84,635,413		90,367,223		84,717,117
Class EX units exchangeable into Sunlight Financial Holdings Inc. Class A shares(a)	44,973,227		—		44,973,227		46,715,978
Incremental Class A Shares attributable to dilutive effect of warrants(b)	—		—		—		—
Immediately-exercisable Bank Partner warrants(c)	—		—		—		—
Class A restricted share units granted to employees and directors (eligible for dividend and dividend equivalent payments)(d)	—		32,788		—		—
Total weighted average shares outstanding, diluted	140,724,710		84,668,201		135,340,450		131,433,095

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. Except for the Bank Partner Warrants, such warrants were out-of-the-money during the three and six months ended June 30, 2023 and 2022,

respectively. Sunlight excluded 139,811 and 47,504 treasury shares from the Bank Partner Warrants as they are anti-dilutive to Sunlight’s basic EPS.

c.Immediately-exercisable Bank Partner warrants are eligible to receive dividends when dividends are declared and paid on Sunlight Class A shares and represent a participating security of Sunlight. They are included in the computation of both basic and diluted earnings per Class A share using the two-class method for participating securities, except during periods of net losses.

d.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.

Summary of 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:




	For the Three Months Ended June 30,		For the Six Months Ended June 30,
Common Shares From	2023	2022	2023	2022
Class EX Units	—	46,802,203	—	—
Warrants(a)	27,150,000	27,150,000	27,150,000	27,150,000
Other warrants	627,780	627,780	627,780	627,780
Unvested Bank Partner Warrants	8,711,826	—	4,355,913	—
Unvested Class EX Units	181,397	793,252	248,170	879,477
RSUs(b)	4,257,275	1,812,969	4,730,096	2,001,987
ESPP(c)	—	24,908	—	29,027
	40,928,278	77,211,112	37,111,959	30,688,271

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.