Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q3 2017 Earnings Presentation
27 slides from Onemain's earnings presentation, Nov 1, 2017
Slide 1: 3Q 2017 Earnings Presentation
OneMain Holdings, Inc. (NYSE: OMF) 3Q 2017 Earnings Presentation November 1, 2017
Slide 2: Important Information
Important Information This document contains summarized information concerning OneMain Holdings, Inc. (the “Company”) and the Company’s business, o perations, financial performance and trends. No representation is made that the information in this document is complete. For additional financial, stat
Slide 3: Important Information: Use of Non-GAAP Financial Measures
Important Information Use of Non-GAAP Financial Measures We report the operating results of Consumer and Insurance, Acquisitions and Servicing, and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for certain costs, primarily interest expense, loan loss reser
Slide 4: 3Q17 Executive Summary
3Q17 Executive Summary ▪ Net income of $69MM, diluted EPS of $0.51 Financial ▪ C&I adjusted diluted EPS* of $0.91, unlevered return* of 11.5% Performance ▪ C&I adjusted diluted EPS* includes estimated hurricane impacts of ~$0.10 ▪ C&I ending net receivables* of $14.3B, growth of $0.5B from 2Q17 Rece
Slide 5: Receivables Growth (C&I)
Receivables Growth (C&I) ($ in billions) C&I originations of $2.6B in 3Q17, up 19% from 3Q16 Ending Net Receivables (“ENR”)* 3Q17 Key Highlights $14.7 - $14.9 ▪ Secured originations 47% of total $14.3 $13.9 ▪ Direct Auto (ENR) 19% vs. 13% in 3Q16 $13.5 $13.5 $13.2 ▪ Yield of 23.4% vs. 24.5% in 3Q16
Slide 6: Credit Metrics (C&I)
Credit Metrics (C&I) ($ in millions) Credit trends and outlook remain positive 30-89 Days Delinquent* 90+ Days Delinquent* $356 $352 $343 $304 $295 $308 $302 $296 $284 $285 2.6% 2.6% 2.3% 2.4% 2.3% 2.3% 2.2% 2.1% 2.1% 2.1% 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Net Charge-offs* Key Highli
Slide 7: Our Business Model
Our Business Model Consistently generating 10%+ unlevered returns Our Business Model ▪ Balanced receivables growth ▪ Scale drives operating leverage ▪ Disciplined underwriting ▪ Target 20%+ return on equity and modest tangible leverage (5 – 7x) (2) Consistent Unlevered Returns (1) Other Finance Comp
Slide 8: 3Q17 Financial Performance
3Q17 Financial Performance ($ in millions, except per share statistics) Consistently generating 10%+ unlevered returns Earnings Summary C&I Adjusted Earnings Summary * 3Q17 2Q17 3Q16 3Q17 2Q17 3Q16 Consumer & Insurance * $194 $174 $196 Interest Income $831 $801 $827 Acquisitions & Servicing * 0 0 2
Slide 9: Operating Leverage (C&I)
Operating Leverage (C&I) ($ in millions) Continued to drive lower operating expense (“OpEx”) ratio* in 3Q17 (3) Operating Expense & OpEx Ratio* $349 $333 $330 $325 10.3% 10.0% 9.9% $303 $300 9.6% $295 9.1% 8.9% 8.4% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 ANR $13.5 $13.3 $13.4 $13.5 $13.3 $13.5 $14.1 *C&
Slide 10: Funding & Liquidity
Funding & Liquidity Diverse funding and liquidity profile 3Q17 Funding Activities 3Q17 Funding & Liquidity Profile(1) ▪ Issued $900MM of 2-yr revolving ABS at 2.6% COF ▪ $14.9B of debt, up $0.2 from 6/30/17 ▪ Unsecured debt of $6.3B (42%) ▪ Retired $250MM of 2017 bond maturities ▪ ABS debt of $8.6B
Slide 11: Capital Structure
Capital Structure Continued progress toward achieving target leverage and capital levels Tangible Leverage* Tangible Equity* 10.4x ($ in millions, unless otherwise noted) 9.8x 9.9x 9.5x 3Q17 4Q17E ~9.0x Long Term Debt $14.6 $14.8 Hybrid Debt (0.2) (0.2) ~7.0x * Adjusted Debt $14.4 $14.6 (1) Tangible
Slide 12: 2017 Outlook
2017 Outlook C&I Adjusted Diluted EPS* C&I Estimates ▪ 4Q17 adjusted diluted EPS $1.05 $3.60 $3.63 $3.53 ▪ Full year ENR ($B): $14.7 - $14.9 $1.77 ▪ 4Q17 ANR ($B): ~$14.6 $1.28 ▪ Full year net charge-offs: 7.0% 2014 2015 2016 2017 Est. Reflects estimated hurricane impacts of $0.10 ▪ 4Q17 net charge-
Slide 13: Appendix
% OneMain. Lending Made Personal Appendix 13
Slide 14: Credit Performance – Springleaf (C&I)
Credit Performance – Springleaf (C&I) Secured lending continues to drive improved credit performance (1) Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 days past due at 6 months on book Secured charge-offs more than 50% lower than unsecured 53% 57% 3.0% 3.2% 46% 2.6
Slide 15: Credit Performance – Former OneMain (C&I)
Credit Performance – Former OneMain (C&I) Secured lending expected to drive loss improvements (1) Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 daysBypast Origination due at 6Vintage months on book 32% in 3Q17 2016 vintage impacted by integration related activities
Slide 16: Non C&I Results
Non C&I Results ($ in millions) 3Q17 YTD 4Q17 2017 FY Actual Estimate Estimate SpringLeaf Debt Discount Accretion ($58) ($12) ($70) OMFH LLR Provision Catch-up (32) (8) (40) OMFH Receivable Premium Amort (118) (22) (140) OMFH Receivable Discount 40 5 45 (1) Acquisition & Integration Costs (62) (8) (
Slide 17: Consolidated Income Statement (GAAP)
Consolidated Income Statement (GAAP) (unaudited, in millions, except per share statistics) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Finance Charges $805 $768 $756 $765 $763 $3,036 $1,870 Finance Receivables Held for Sale Originated as Held for Investment 3 4 3 3 7 74 60 Total Interest Income 808 772 759 7
Slide 18: Consolidated Balance Sheet (GAAP)
Consolidated Balance Sheet (GAAP) (unaudited, in millions) 9/30/17 6/30/17 3/31/17 12/31/16 9/30/16 Cash and Cash Equivalents $916 $862 $787 $579 $658 Investment Securities 1,668 1,750 1,755 1,764 1,788 Net Finance Receivables: Personal Loans and Retail Sales Finance 14,363 13,916 13,249 13,588 13,6
Slide 19: Key Segment Metrics
Key Segment Metrics (unaudited, in millions) 9/30/17 6/30/17 3/31/17 12/31/16 9/30/16 Consumer & Insurance $14,334 $13,856 $13,157 $13,455 $13,485 Acquisition & Servicing 0 0 0 0 0 Other 148 156 164 176 237 Segment to GAAP Adjustment 14 38 67 101 148 Net Finance Receivables Held for Investment - GAA
Slide 20: Consumer and Insurance Segment (Non-GAAP)
Consumer and Insurance Segment (Non-GAAP) (unaudited, in millions, except per share statistics) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Finance Charges $831 $801 $798 $821 $827 $3,272 $1,439 Finance Receivables Held for Sale Originated as Held for Investment 0 0 0 0 0 56 43 Total Interest Income 831 801
Slide 21: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, in millions) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Revenue (1) 26.3% 26.6% 26.8% 27.6% 28.1% 28.0% 29.1% Net Charge-Off (2) (6.4%) (6.9%) (8.5%) (7.5%) (6.2%) (7.1%) (5.6%) Risk Adjusted Margin 19.9% 19.8% 18.3% 20.1% 21.9% 20.9% 23.5% Operati
Slide 22: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, in millions) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Gross Charge-Off $257 $266 $313 $281 $236 $1,050 $365 Gross Charge-Off Ratio (1) 7.2% 7.9% 9.6% 8.3% 7.0% 7.8% 6.4% Recovery $30 $35 $36 $28 $26 $102 $46 Recovery Ratio 0.8% 1.0% 1.1% 0.8% 0.8%
Slide 23: Acquisitions and Servicing Segment (Non-GAAP)
Acquisitions and Servicing Segment (Non-GAAP) (unaudited, in millions) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Interest Income $0 $0 $0 $0 $0 $102 $463 Interest Expense 0 0 0 0 0 (20) (87) Provision for Finance Receivable Losses 0 0 0 0 0 (14) (68) Net Interest Income after Provision 0 0 0 0 0 68 308 Inv
Slide 24: Other (Non-GAAP)
Other (Non-GAAP) (unaudited, in millions) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Finance Charges $3 $2 $4 $5 $4 $35 $63 Finance Receivables Held for Sale Originated as Held for Investment 3 4 2 3 7 16 13 Total Interest Income 6 6 6 8 11 51 76 Interest Expense (5) (5) (6) (6) (9) (43) (268) Provision for
Slide 25: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 3Q17 2Q17 1Q17 4Q16 3Q16 FY16 FY15 Consumer & Insurance $171 $144 $142 $136 $179 $688 $345 Acquisition & Servicing 0 0 1 2 2 225 254 Other (13) (8) (13) (15) (30) (90) (284) Segment to GAAP Adjustment (37) (70) (73) (94) (118) (467) (541)
Slide 26: Reconciliation of Balance Sheet Metrics
Reconciliation of Balance Sheet Metrics Prior to 310-30 Policy Change (unaudited, in millions) 9/30/17 6/30/17 3/31/17 12/31/16 9/30/16 12/31/15 Total Assets $19,050 $18,698 $17,973 $18,123 $18,353 $21,056 Less: Goodwill (1,422) (1,422) (1,422) (1,422) (1,422) (1,440) Less: Other Intangible Assets (
Slide 27: Reconciliation of C&I Unlevered Returns
Reconciliation of C&I Unlevered Returns (unaudited, in millions) 2012 2013 2014 2015 2016 Revenue (1) $2,867 $3,061 $3,385 $3,613 $3,770 Net Charge-Offs (2) (571) (591) (677) (819) (948) Risk Adjusted Margin 2,296 2,470 2,708 2,794 2,822 Operating Expense (1,169) (1,129) (1,175) (1,348) (1,337) Unle