Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q3 2016 Earnings Presentation
33 slides from Onemain's earnings presentation, Nov 7, 2016
Slide 1: 3Q 2016 Earnings Presentation
OneMain Holdings, Inc. (NYSE: OMF) 3Q 2016 Earnings Presentation November 7, 2016
Slide 2: Important Information
Important Information This document contains summarized information concerning OneMain Holdings, Inc. (the “Company”) and the Company’s business, operations, financial performance and trends. No representation is made that the information in this document is complete. For additional financial, stati
Slide 3: Important Information
Important Information Use of Non-GAAP Financial Measures We report the operating results of our Consumer and Insurance segment, Acquisitions and Servicing segment, Real Estate segment, and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for certain costs, pr
Slide 4: 3Q16 Executive Summary
3Q16 Executive Summary Net income of $25MM, diluted EPS of $0.19 Financial Consumer and Insurance (“C&I”) adjusted net income* of $122MM Performance Consumer and Insurance (“C&I”) adjusted diluted EPS* of $0.90 C&I average net receivables* of $13.4B, up 9.5%(1) year over year Receivables I
Slide 5: Our Business Model
Our Business Model Our business model consistently generates 10% unlevered returns Our Business Model Balanced receivables growth Scale drives operating leverage Disciplined underwriting Target 20%+ return on equity and modest tangible leverage (5 – 7x) (2) Consistent Unlevered Returns (1) O
Slide 6: Disciplined Underwriting
Disciplined Underwriting Springleaf underwriting has been tested through multiple credit cycles We assess each borrower’s income and only lend against a portion of income after expenses Decades of credit data spanning multiple economic cycles provides a proprietary edge Local community presenc
Slide 7: Disciplined Underwriting
Disciplined Underwriting 2016 C&I Net Charge-Off (“NCO”) Ratio expected to be 7.1% C&I 30-89 Delinquency* and Net Charge-Off Ratios* C&I NCO Estimated impact of 2Q16 accounting policy alignment & branch sale C&I implied/estimated NCO C&I 30-89 Delinquency Springleaf 30-89 Delinquency C&I 30-89 impli
Slide 8: Disciplined Underwriting - Springleaf
Disciplined Underwriting - Springleaf Secured lending improves credit performance Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 days past due at 6 months on book Secured charge-offs more than 50% lower than unsecured 53% 55% 46% 3.2% 3.0% 2.6% 2014 2015 1Q16 2014 2
Slide 9: Disciplined Underwriting - Former OneMain
Disciplined Underwriting – Former OneMain Springleaf strategies expected to drive 2018 loss improvements Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 daysBypast Origination due at 6Vintage months on book 21% as of 3Q16 1Q16 vintage partially impacted by integratio
Slide 10: Receivables Growth
Receivables Growth Continued growth at former Springleaf Integration activities have delayed growth at former OneMain (2) Former OneMain Secured C&I Pre-Acquisition Profile (1) C&I Avg. Net Receivables * ($B) Originations % Springleaf OneMain Year over year growth $13.4 $13.1 $12.3 38% Receivables $
Slide 11: Guidance Update
Guidance Update Current guidance driven by lower receivables outlook and integration related activities (1) (1) (1) C&I Ending Net Receivables* C&I Adjusted Diluted Earnings per Share* ($ in billions) Branch Sale Receivables 10-15% Previous Guidance 10-15% $13.6 2016 Est. 2017 Est. ~$17 ~$15 (2) $13
Slide 12: 3Q16 Financial Performance
3Q16 Financial Performance ($ in millions, except per share statistics) Delivering strong unlevered returns of 10%+ Earnings Summary C&I Return on Receivables Trends* (1) 3Q16 2Q16 3Q15 1Q16 2Q16 3Q16 Consumer & Insurance * $196 $210 $77 Revenue 28.3% 28.2% 28.1% Acquisitions & Servicing * 2 2 30 Ch
Slide 13: Scale Drives Operating Leverage
Scale Drives Operating Leverage C&I Operating Expense (“OpEx”) ratio* down 90bps from 4Q15 (3) Pre-Acquisition Profile (1) Realizing significant cost synergies since acquisition ($ in millions) $360 C&I Operating Expense $349 ~13% OpEx Ratio* ~9% $333 $330 ~$325 2016 Accomplishments HQ and branch
Slide 14: Funding & Liquidity
Funding & Liquidity Strong liquidity profile with balanced unsecured debt maturities Diverse Funding Sources & Balanced Maturities (1) Funding & Liquidity Progress $14.4B debt, down $0.4B from 6/30/16 12+ months of forward liquidity(1) Unsecured debt $6.1B (42%) • $0.3B of available cash and c
Slide 15: Capital Structure
Capital Structure Tangible leverage* and tangible equity continue to improve Tangible Leverage* on track Estimated Tangible Equity* Improvement 18.5x (2) (3) 3Q16 4Q16E 2017E 11.4x 10.7x C&I Adjusted Net Income * $122 $115 $525 ~9.0x Other (4) ($96) ($100) ($225) ~7.0x Change in Total Shareholders'
Slide 16: Our Business Model
Our Business Model Our business model consistently generates 10% unlevered returns C&I Adjusted Diluted EPS* Our Business Model $3.75 - $4.00 $3.60 - $3.70 (1) Balanced receivables growth Disciplined underwriting $1.77 Scale drives operating leverage $1.28 Target 20%+ return on equity and mo
Slide 17: Appendix
% OneMain. Lending Made Personal Appendix 17
Slide 18: Consolidated Income Statement
Consolidated Income Statement (GAAP) (unaudited, in millions, except per share statistics) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Finance Charges $763 $723 $785 $643 $422 $1,870 $1,911 Finance Receivables Held for Sale Originated as Held for Investment 7 18 46 47 5 60 62 Total Interest Income 770 741 83
Slide 19: Consolidated Balance Sheets
Consolidated Balance Sheets (GAAP) Prior to 310-30 Policy Change (unaudited, in millions) 9/30/16 6/30/16 3/31/16 12/31/15 12/31/15 Cash and Cash Equivalents $658 $742 $716 $939 $939 Investment Securities 1,788 1,744 1,872 1,867 1,867 Net Finance Receivables: Personal Loans & Retail Sales Finance 13
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Pretax Income (Loss) Attributable to OMH - GAAP basis $33 $42 $224 ($331) ($12) ($353) $735 GAAP to Segment Accounting Basis Adjustments: Interest Income 68 106 136 100 (3) 91 (89) Interest Expense 15 14
Slide 21: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Consumer & Insurance Pretax Income - Segment Accounting Basis $179 $206 $167 $127 $77 $345 $228 Adjustments: Net Loss on Repurchases and Repayments of Debt 0 5 8 0 0 0 7 Net Gain on Sale of Personal Loans
Slide 22: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 Net Finance Receivables Consumer & Insurance $13,485 $13,304 $12,984 $12,954 $4,044 Acquisition & Servicing 0 0 0 1,703 1,789 Real Estate 210 219 542 565 591 Other 27 30 35 41 48 Net Finance Receivables - Segment A
Slide 23: Consumer and Insurance Segment
Consumer and Insurance Segment (non-GAAP) (unaudited, in millions, except per share statistics) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Finance Charges $827 $817 $807 $621 $293 $1,439 $916 Finance Receivables Held for Sale Originated as Held for Investment 0 14 42 43 0 43 0 Total Interest Income 827 831
Slide 24: Acquisitions and Servicing Segment
Acquisitions and Servicing Segment (non-GAAP) (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Interest Income $0 $0 $102 $108 $113 $463 $545 Interest Expense 0 0 (20) (20) (22) (87) (82) Provision for Finance Receivable Losses 0 0 (14) (15) (15) (68) (105) Net Interest Income after Provi
Slide 25: Real Estate Segment
Real Estate Segment (non-GAAP) (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Finance Charges $3 $12 $12 $12 $14 $55 $354 Finance Receivables Held for Sale Originated as Held for Investment 7 3 3 4 3 13 52 Total Interest Income 10 15 15 16 17 68 406 Interest Expense (8) (14) (13) (35) (
Slide 26: Other
Other (non-GAAP) (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 FY15 FY14 Interest Income $1 $1 $1 $2 $1 $8 $17 Interest Expense (1) (1) 0 (8) (16) (56) (8) Provision for Finance Receivable Losses 0 0 0 0 0 (1) (7) Net Interest Income (Loss) after Provision 0 0 1 (6) (15) (49) 2 Other 0 0 0 0 0 0
Slide 27: Reconciliation of Balance Sheet Metrics
Reconciliation of Balance Sheet Metrics Prior to 310-30 Policy Change (unaudited, in millions) 9/30/16 6/30/16 3/31/16 12/31/15 12/31/15 Total Assets $18,353 $18,544 $19,134 $21,190 $21,056 Less: Goodwill (1,422) (1,422) (1,422) (1,440) (1,440) Less: Other Intangible Assets (507) (523) (539) (559) (
Slide 28: Acquisition Related Accounting Impacts
Acquisition Related Accounting Impacts Includes the impact of non-cash acquisition accounting, acquisition and integration related costs, and other operations Supplement Previous % of Previous 2016 YTD (1) FY16 Est FY16 Est SpringLeaf Debt Discount Accretion ($67) ($100) 67% OMFH LLR Provision Catch
Slide 29: Consumer & Insurance Pro forma Reconciliation
Consumer & Insurance Pro forma Reconciliation (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 GAAP Pretax Income (Loss) Attributable to OMH $33 $42 $224 ($331) ($12) Acquisition & Servicing (2) (2) (26) (28) (30) Real Estate / Other 8 15 13 39 63 Net Loss on Repurchases and Repayments of Debt 0 6
Slide 30: Consumer & Insurance Pro forma Financials
Consumer & Insurance Pro forma Financials (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 Finance Charges $827 $817 $807 $799 $818 Finance Receivables Held for Sale Originated as Held for Investment 0 14 42 43 0 Total Interest Income 827 831 849 842 818 Interest Expense (191) (185) (175) (160) (16
Slide 31: Consumer & Insurance Pro forma Metrics
Consumer & Insurance Pro forma Metrics (unaudited, in millions) 3Q16 2Q16 1Q16 4Q15 3Q15 Revenue (1) 28.1% 28.2% 28.3% 28.1% 28.5% Net Charge-Offs (2) (6.2%) (7.0%) (7.5%) (6.5%) (5.5%) Risk Adjusted Margin 21.9% 21.2% 20.8% 21.6% 23.0% Operating Expenses (9.9%) (10.0%) (10.3%) (10.8%) (10.7%) Unlev
Slide 32: Consumer & Insurance Unlevered Metrics
Consumer & Insurance Unlevered Metrics (unaudited, in millions) 2011 2012 2013 2014 2015 Revenue (1) $2,784 $2,867 $3,061 $3,385 $3,613 Net Charge-Offs (2) (598) (571) (591) (677) (819) Risk Adjusted Margin 2,186 2,296 2,470 2,708 2,794 Operating Expense (1,234) (1,169) (1,129) (1,175) (1,348) Unlev
Slide 33: Integration Activities
Integration Activities OneMain Integration Activities through 2Q16 OneMain Integration Activities since 2Q16 4Q15 • Completed OneMain acquisition on • Created unified branch leadership structure, November 15 leveraging district managers from both networks 1Q16 • Alignment of HQ and senior • Aligned