Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q2 2021 Earnings Presentation
31 slides from Onemain's earnings presentation, Jul 22, 2021
Slide 1: OneMain Financial 2Q21 Earnings Presentation
1 OneMain Financial 2Q21 Earnings Presentation (NYSE: OMF) July 21, 2021
Slide 2: Important Information
2 Important Information This presentation 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 presentation is complete. For additional financ
Slide 3: Important Information
3 Important Information Security Act, the Consolidated Appropriations Act of 2021, and the American Rescue Plan Act of 2021; risks associated with our insurance operations, including insurance claims that exceed our expectations or insurance losses that exceed our reserves; our inability to successf
Slide 4: Business Highlights
Business Highlights • Our vision is to be the lender of choice for the near-prime consumer, solving their current needs Customer-Focused while enabling progress toward a better future Vision • Continuing to broaden our products and services to expand and deepen our customer relationships • Managed R
Slide 5: 2Q21 Financial Performance Highlights
5 2Q21 Financial Performance Highlights ($ in millions, except per share statistics or unless noted) Earnings Credit (C&I)* YoY YoY 2Q21 2Q20 2Q21 2Q20 Chg. Chg. Net Income $350 $89 293% Change in LLR ($64) $140 NM C&I Adj. Net Income*1 $358 $107 235% Net Charge-offs $194 $282 (31%) C&I Change in LL
Slide 6: 2Q21 Financial Results
2Q21 Financial Results ($ in millions, except Average Assets and Average Net Receivables in billions, and per share statistics) Earnings Summary C&I* C&IAdjusted Adjusted Earnings Summary Earnings Summary* 2Q21 1Q21 2Q20 2Q21 1Q21 2Q20 Consumer & Insurance* $477 $607 $143 Interest Income $1,069 $1,0
Slide 7: Future Vision Deepens & Broadens Customer Relationships
Future Vision Deepens & Broadens Customer Relationships Unsecured Insurance Loans Financial Secured Wellness Progress to a Loans Meet the needs Credit better future of today OneMain Builder/ Products & Services Customers Secured that increase Lending products Card Credit engagement, build Card loyal
Slide 8: Strategy Drives Customer Engagement and Growth
Strategy Drives Customer Engagement and Growth ($ in millions) 2020 Future Goal 2025† Expanded product Customers 2.3MM 2x+ set opens avenues to more customers Expanded product Customers with 2 or set broadens more products1 ~20% 50%+ customer relationships Average Length of Diversified offerings Rel
Slide 9: Originations & Receivables (C&I)
Originations & Receivables (C&I)* ($ in billions unless noted) Originations Highlights $3.9 $3.8 $3.2 • Originations grew 87% year-over-year and $2.9 68% sequentially $2.3 $2.0 • Strong originations driven by economic reopening and return of consumer demand, as well as targeted management initiative
Slide 10: Originations (C&I) Versus 2019 By Month
Originations (C&I)* Versus 2019 By Month ($ in millions unless noted) Highlights • Strong originations trend as the economy reopens and consumer demand returns • Origination growth also driven by product innovation and new channels as well as advanced analytics implemented across operations, marketi
Slide 11: Delinquency & Net Charge-off Trends (C&I)
Delinquency & Net Charge-off Trends (C&I)* ($ in millions) 30-89 Days Delinquent Net Charge-offs $450 $413 5.00% $300 $282 $366 $256 16.00% $400 $348 $232 $320 $250 14.00% $205 4.00% $194 $350 $300 $290 $276 $200 $189 12.00% 2.28% 3.00% 10.00% $250 2.15% 1.95% 1.63% 1.76% $150 6.20% 6.33% 8.00% $200
Slide 12: Loan Loss Reserve Trends (C&I)
Loan Loss Reserve Trends (C&I)* ($ in millions) $2,342 $2,342 $2,283 $2,202 $2,075 $58 ($122) $1,968 $2,011 Reserve 10.7% 12.0% 13.2% 13.1% 12.6% 11.8% 11.1% (% of ENR) 1 1/1/2020 1Q20 2Q20 3Q20 4Q20 1Q21 ENR Growth Credit 2Q21 2Q21 reserve reduction driven by improving credit outlook and sustained
Slide 13: Operating Expense Trends (C&I)
Operating Expense Trends (C&I)* ($ in millions) Highlights • 2Q20 and 3Q20 expenses reflect cost actions taken in association with the onset of COVID-19 • 2Q21 Opex Ratio of 7.5% remains below 2019 level despite accelerating investment in the business and recent receivables growth • Expect full year
Slide 14: Balance Sheet & Liquidity
Balance Sheet & Liquidity ($ in billions unless noted) Highlights • Issued $850MM 5-year revolving ABS at 1.56% • Issued $750MM high-yield Social Bond due 2027 at 3.50% • Completed $120MM of whole loan sales in 2Q21 • Net Leverage* of 4.5x in the lower end of 4 – 6x target range Liquidity Net Levera
Slide 15: Adjusted Capital Roll-Forward
Adjusted Capital* Roll-Forward ($ in millions) Last Three Months Last Twelve Months $1,232 ($46) ($1,040) $310 ($3) ($130) $3,485 $3,485 $3,308 $3,339 1Q21 Ending Capital Other Capital 2Q21 Ending 2Q20 Ending Capital Other Capital 2Q21 Ending Adjusted Generation Returns Adjusted Adjusted Generation
Slide 16: We have a disciplined capital allocation framework
We have a disciplined capital allocation framework 1 Fund portfolio growth with loans that meet our risk / return criteria • Originations of $3.8B in 2Q21 through best in class underwriting decisioning engine and >20% ROTCE* at the loan level • June originations 10% above 2019 levels1 2 Invest in ou
Slide 17: Consistently Strong Dividend History
Consistently Strong Dividend History Dividends/Share1 Board will evaluate dividends above the $3.95 $4.20 quarterly minimum (currently $0.70 per $2.83 $2.33 quarter) every Q1 and Q3 consistent with $0.33 $0.45 $0.70 prior quarters and our capital allocation strategy 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q2
Slide 18: Attractive Valuation & Strong Return Profile
Attractive Valuation & Strong Return Profile Total Shareholder Return LTM Dividend Yield2 2021 P/E Multiple3 (2Y)1 16.2% 131.2% 10.8x 108.5% 8.3x 6.0x 46.5% 23.0% 3.0% 1.4% 0.0% NM OneMain Specialty FinTech Bank OneMain Specialty FinTech Bank OneMain Specialty FinTech Bank Finance Peers Peers Financ
Slide 19: Updated 2021 Strategic Priorities
Updated 2021 Strategic Priorities Previous Current 20191 2020 2021E 2021E C&I* Segment Yield 24.1% 24.2% Stable Stable Metrics Interest Expense 5.5% 5.6% 5.0 – 5.2% 5.0 – 5.2% Net Charge-offs 6.0% 5.5% ~5% ~4.2% Operating Expense Growth 3% (3%) 5 – 7% 5 – 7% Managed Receivables Growth 14% (2%) N/A 8
Slide 20: Appendix
Appendix OneMain Financial.
Slide 21: Consolidated Income Statements
Consolidated Income Statements (unaudited, $ in millions, except per share statistics) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Interest Income $1,071 $1,060 $1,096 $1,089 $1,077 $4,368 $4,127 Interest Expense (231) (235) (246) (255) (271) (1,027) (970) Provision for Finance Receivable Losses (132) 2 (134
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, $ in millions) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Cash and Cash Equivalents $1,787 $1,301 $2,272 $1,944 $2,740 Investment Securities 1,969 1,951 1,922 1,882 1,862 Net Finance Receivables 18,163 17,564 18,084 17,817 17,721 Unearned Insurance Pre
Slide 23: Balance Sheet Metrics
Balance Sheet Metrics (unaudited, $ in millions) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Long-Term Debt $17,605 $16,789 $17,800 $17,531 $18,010 Less: Junior Subordinated Debt (172) (172) (172) (172) (172) Adjusted Debt $17,433 $16,617 $17,628 $17,359 $17,838 Less: Available Cash and Cash
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, $ in millions) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Consumer & Insurance $474 $567 $491 $351 $128 $1,021 $1,168 Other (2) (3) (4) (2) (1) (9) (3) Segment to GAAP Adjustment (9) (18) (11) (8) (9) (35) (67) Income Before Income Taxes - GAAP basis $463 $546
Slide 25: Reconciliation of Non-GAAP Measures (cont'd)
Reconciliation of Non-GAAP Measures (cont’d) (unaudited, $ in millions) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Consumer & Insurance $18,168 $17,569 $18,091 $17,826 $17,732 Other 0 0 0 0 0 Segment to GAAP Adjustment (5) (5) (7) (9) (11) Net Finance Receivables - GAAP basis $18,163 $17,564
Slide 26: Consumer & Insurance Segment (Non-GAAP)
Consumer & Insurance Segment (Non-GAAP) (unaudited, $ in millions, except per share statistics) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Interest Income $1,069 $1,057 $1,093 $1,086 $1,074 $4,353 $4,114 Interest Expense (230) (233) (242) (250) (266) (1,007) (947) Provision for Finance Receivable Losses (13
Slide 27: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, $ in millions, except per share statistics) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Revenue (1) 26.4% 26.4% 26.3% 26.4% 25.3% 25.9% 26.6% Net Charge-off (4.4%) (4.7%) (4.2%) (5.2%) (6.3%) (5.5%) (6.0%) Risk Adjusted Margin 22.0% 21.7% 22.1% 21.2
Slide 28: Consumer & Insurance Capital Metrics (Non-GAAP)
Consumer & Insurance Capital Metrics (Non-GAAP) (unaudited, $ in millions) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Provision for Finance Receivable Losses $130 ($3) $130 $232 $422 $1,313 $1,105 Net Charge-offs (194) (205) (189) (232) (282) (998) (1,028) Change in C&I Allowance for Finance Receivable (64)
Slide 29: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, $ in millions) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Gross Charge-offs $252 $255 $231 $274 $322 $1,163 $1,172 Gross Charge-off Ratio 5.70% 5.81% 5.12% 6.15% 7.22% 6.46% 6.86% Recoveries $58 $50 $42 $42 $40 $165 $143 Recovery Ratio 1.29% 1.14% 0
Slide 30: Other (Non-GAAP)
Other (Non-GAAP) (unaudited, $ in millions) 2Q21 1Q21 4Q20 3Q20 2Q20 FY20 FY19 Interest Income $1 $1 $2 $1 $1 $6 $9 Interest Expense (1) (1) (1) (1) (1) (4) (5) Net Interest Income after Provision for Finance 0 0 1 0 0 2 4 Receivable Losses Other Revenues 4 4 3 4 4 16 26 Other Expenses (6) (6) (6) (
Slide 31: Glossary
Glossary Select Calculations: • Adjusted Capital = Adjusted Tangible Common Equity + Allowance for Finance Receivable Losses (ALLL) + Deferred Tax Asset on Allowance • Adjusted Debt = Long-Term Debt – Junior Subordinated Debt • Adjusted Tangible Common Equity (TCE) = Total Shareholders’ Equity – Goo