Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q1 2017 Earnings Presentation
26 slides from Onemain's earnings presentation, May 3, 2017
Slide 1: 1Q 2017 Earnings Presentation
OneMain Holdings, Inc. (NYSE: OMF) 1Q 2017 Earnings Presentation May 3, 2017
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: 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: 1Q17 Executive Summary
1Q17 Executive Summary ▪ Net income of $33MM, diluted EPS of $0.25 Financial ▪ Consumer and Insurance (“C&I”) adjusted net income* of $103MM Performance ▪ Consumer and Insurance (“C&I”) adjusted diluted EPS* of $0.76 (1) ▪ C&I average net receivables (“ANR”)* of $13.3B, up 2.5% from 1Q16 Receivables
Slide 5: Our Business Model
Our Business Model Our business model consistently generates 10% unlevered returns Our Business Model ▪ Balanced receivables growth ▪ Scale drives operating leverage ▪ Disciplined underwriting ▪ Target 20%+ return on equity and modest tangible leverage (5 – 7x) (1) (2) Consistent Unlevered Returns O
Slide 6: Receivables Growth
Receivables Growth ($ in billions) Receivables growth tracking in-line with expectations C&I Ending Net Receivables (“ENR”)* Key Highlights $13.6 - $13.7 $13.3 $13.5 $13.5 ▪ Mid-March and April trends support full $13.2 $13.0 year outlook ▪ Conversion rates increased ~10% in the last six weeks compa
Slide 7: Credit Metrics
Credit Metrics ($ in millions) Stable credit metrics support 2017 net charge-off ratio in low 7’s C&I 30-89 Days Delinquent* C&I Net Charge-offs* $356 $277 $304 $254 (1) $253 $294 $284 $243 $242 2.6% 2.3% $210 8.5% 2.2% (1) 2.2% 7.5% 7.5% 7.3% 1.8% 6.2% 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1
Slide 8: 1Q17 Financial Performance
1Q17 Financial Performance ($ in millions, except per share statistics) Earnings Summary C&I Earnings Summary * 1Q17 4Q16 1Q16 1Q17 4Q16 1Q16 Consumer & Insurance * $163 $175 $203 Interest Income $798 $821 $849 (1) Acquisitions & Servicing * 1 2 26 Other Net Revenue 93 108 110 Other * (7) (7) (13) P
Slide 9: Operating Leverage
Operating Leverage ($ in millions) C&I Operating Expense (“OpEx”) ratio* down 120bps from 1Q16 (3) C&I Operating Expense & OpEx Ratio* 2017 Priorities $349 ▪ Eliminated Citi TSA expense, full benefits $333 $330 $325 expected to be realized in 2Q17 10.3% 10.0% 9.9% $303 ▪ Completed branch consolidati
Slide 10: Funding & Liquidity
Funding & Liquidity ($ in billions, unless otherwise noted) Diverse funding and liquidity profile Diverse Funding Sources (1) Funding & Liquidity Progress ▪ $14.0 of debt, down $0.3 from 12/31/16 ▪ 12+ months of forward liquidity(1) ▪ Unsecured debt of $6.0 (43%) ▪ $4.6 of undrawn revolving conduit
Slide 11: Capital Structure
Capital Structure Steady improvement toward target leverage and capital levels Tangible Leverage* Tangible Equity* 12.4x ($ in millions, unless otherwise noted) (1) 10.4x 1Q17 2017E 9.8x ~9.0x C&I Adjusted Net Income * $103 $525 ~7.0x Other (2) ($70) ($225) Net Income $33 $300 Adjusted Tangible Comm
Slide 12: Capital Generation Potential
Capital Generation Potential ($ in millions unless otherwise noted) Approaching our target capital ratio (1) (1) $17.6B 12% – 15% $2.1 – $2.6B $1.6B 2017 Projected Tangible Assets Target Tangible Equity Ratio Target Tangible Equity > 2017 Projected Tangible Equity Illustrative Capital Generation and
Slide 13: 2017 Outlook
2017 Outlook C&I Adjusted Diluted EPS* C&I Receivables & Credit ▪ Full year ENR ($B): $14.3 - $15.0 $3.75 - $4.00 ▪ 2Q17 ENR ($B): $13.6 - $13.7 $3.60 ▪ 2Q17 ANR ($B): ~$13.4 $1.77 $1.28 ▪ Full year net charge-offs: low 7’s ▪ 2Q17 net charge-offs: ~7.2% 2014 2015 2016 2017 Est. ▪ 2nd half 2017 net c
Slide 14: Appendix
% OneMain. Lending Made Personal Appendix 14
Slide 15: Consolidated Income Statement (GAAP)
Consolidated Income Statement (GAAP) (unaudited, in millions, except per share statistics) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Finance Charges $756 $765 $763 $723 $785 $3,036 $1,870 Finance Receivables Held for Sale Originated as Held for Investment 3 3 7 18 46 74 60 Total Interest Income 759 768 770
Slide 16: Consolidated Balance Sheet (GAAP)
Consolidated Balance Sheet (GAAP) (unaudited, in millions) 3/31/17 12/31/16 9/30/16 6/30/16 3/31/16 Cash and Cash Equivalents $787 $579 $658 $742 $716 Investment Securities 1,755 1,764 1,788 1,744 1,872 Net Finance Receivables: Personal Loans & Retail Sales Finance 13,249 13,588 13,669 13,548 13,319
Slide 17: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Pretax Income (Loss) Attributable to OMH - GAAP basis $57 $29 $33 $42 $224 $328 ($353) GAAP to Segment Accounting Basis Adjustments: Interest Income 45 61 68 106 136 371 91 Interest Expense 10 8 15 14 18
Slide 18: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Pretax Income (Loss) - Segment Accounting Basis $142 $136 $179 $206 $167 $688 $345 Net Loss on Repurchases and Repayments of Debt 1 1 0 5 8 14 0 Net Gain on Sale of Personal Loans 0 0 0 (22) 0 (22) 0 Acqu
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 3/31/17 12/31/16 9/30/16 6/30/16 3/31/16 Consumer & Insurance $13,157 $13,455 $13,485 $13,304 $12,984 Acquisition & Servicing 0 0 0 0 0 Other 164 176 237 249 577 Segment to GAAP Adjustment 67 101 148 204 275 Net Finance Receivables - GAAP
Slide 20: Consumer and Insurance Segment (Non-GAAP)
Consumer and Insurance Segment (Non-GAAP) (unaudited, in millions, except per share statistics) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Finance Charges $798 $821 $827 $817 $807 $3,272 $1,439 Finance Receivables Held for Sale Originated as Held for Investment 0 0 0 14 42 56 43 Total Interest Income 798 82
Slide 21: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, in millions) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Revenue (1) 26.8% 27.6% 28.1% 28.2% 28.3% 28.0% 29.1% Net Charge-Offs (8.5%) (7.5%) (6.2%) (7.0%) (7.5%) (7.1%) (5.6%) Risk Adjusted Margin 18.3% 20.1% 21.9% 21.2% 20.8% 20.9% 23.5% Operating
Slide 22: Reconciliation of C&I Unlevered Returns
Reconciliation of C&I Unlevered Returns (unaudited, in millions) 2011 2012 2013 2014 2015 2016 Revenue (1) $2,784 $2,867 $3,061 $3,385 $3,613 $3,770 Net Charge-Offs (2) (598) (571) (591) (677) (819) (948) Risk Adjusted Margin 2,186 2,296 2,470 2,708 2,794 2,822 Operating Expense (1,234) (1,169) (1,1
Slide 23: Acquisitions and Servicing Segment (Non-GAAP)
Acquisitions and Servicing Segment (Non-GAAP) (unaudited, in millions) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Interest Income $0 $0 $0 $0 $102 $102 $463 Interest Expense 0 0 0 0 (20) (20) (87) Provision for Finance Receivable Losses 0 0 0 0 (14) (14) (68) Net Interest Income after Provision 0 0 0 0 68 6
Slide 24: Other (Non-GAAP)
Other (Non-GAAP) (1) (unaudited, in millions) 1Q17 4Q16 3Q16 2Q16 1Q16 FY16 FY15 Finance Charges $4 $5 $4 $13 $13 $35 $63 Finance Receivables Held for Sale Originated as Held for Investment 2 3 7 3 3 16 13 Total Interest Income 6 8 11 16 16 51 76 Interest Expense (6) (6) (9) (15) (13) (43) (268) Pro
Slide 25: Reconciliation of Balance Sheet Metrics
Reconciliation of Balance Sheet Metrics Prior to 310-30 Policy Change (unaudited, in millions) 3/31/17 12/31/16 9/30/16 6/30/16 3/31/16 12/31/15 Total Assets $17,973 $18,123 $18,353 $18,544 $19,134 $21,056 Less: Goodwill (1,422) (1,422) (1,422) (1,422) (1,422) (1,440) Less: Other Intangible Assets (
Slide 26: Credit Performance: Springleaf and Former OneMain
Credit Performance Portfolio 30 – 89 Delinquency Portfolio Vintage Performance Annual weighted average 60 days past due at 6 months on book Down from 1H16 of 2.7% 3.0% 3.2% Springleaf 2.6% 2.6% 2.3% 2.3% 2014 2015 2016 2014 2015 3Q16 YTD Down from Former OneMain 1H16 of 3.1% 2.9% 2.2% 2.5% 2.6% 1.8%