Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q2 2017 Earnings Presentation
27 slides from Onemain's earnings presentation, Aug 2, 2017
Slide 1: 2Q 2017 Earnings Presentation
OneMain Holdings, Inc. (NYSE: OMF) 2Q 2017 Earnings Presentation August 2, 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: 2Q17 Executive Summary
2Q17 Executive Summary ▪ Net income of $42MM, diluted EPS of $0.30 Financial ▪ Consumer and Insurance (“C&I”) adjusted net income* of $110MM Performance ▪ C&I adjusted diluted EPS* of $0.81, unlevered return of 10.9% ▪ C&I ending net receivables of $13.9B, growth of ~$700MM from 1Q17 Receivables ▪ C
Slide 5: Our Business Model
Our Business Model Consistently generating 10% unlevered returns Our Business Model ▪ Balanced receivables growth ▪ Scale drives operating leverage ▪ Disciplined underwriting ▪ Target 20%+ return on equity and modest tangible leverage (5 – 7x) (2) Consistent Unlevered Returns (1) Other Finance Compa
Slide 6: Receivables Growth (C&I)
Receivables Growth (C&I) ($ in billions) C&I record originations of $3.0B in 2Q17, up 16% from 2Q16 Ending Net Receivables (“ENR”)* 2Q17 Key Highlights $14.4 - $14.6 ▪ Secured originations 47%, portfolio 40% $13.9 secured at quarter end $13.5 $13.5 $13.3 $13.2 ▪ Direct Auto originations 24% vs. 18%
Slide 7: Credit Metrics (C&I)
Credit Metrics (C&I) ($ in millions) Credit trends and outlook remain positive 30-89 Days Delinquent* 90+ Days Delinquent* $356 $352 $294 $304 $295 $308 $302 $284 $285 2.6% $257 2.6% 2.3% 2.3% 2.2% 2.2% 2.1% 2.3% 2.1% 1.9% 2Q16 3Q16 4Q16 1Q17 2Q17 2Q16 3Q16 4Q16 1Q17 2Q17 Net Charge-offs* Key Highli
Slide 8: 2Q17 Financial Performance
2Q17 Financial Performance ($ in millions, except per share statistics) Consistently delivering 10%+ unlevered returns Earnings Summary C&I Adjusted Earnings Summary * 2Q17 1Q17 2Q16 2Q17 1Q17 2Q16 Consumer & Insurance * $174 $163 $210 Interest Income $801 $798 $831 Acquisitions & Servicing * 0 1 2
Slide 9: Operating Leverage (C&I)
Operating Leverage (C&I) ($ in millions) Receivables growth expected to drive lower operating expense (“OpEx”) ratio* in 2H17 (3) Operating Expense & OpEx Ratio* $349 $333 $330 $325 10.3% 10.0% 9.9% $303 $300 9.6% 9.1% 8.9% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 (1) ANR $13.5 $13.3 $13.4 $13.5 $13.3 $13.5 *C
Slide 10: Funding & Liquidity
Funding & Liquidity Diverse funding and liquidity profile 2Q17 Funding Activities 2Q17 Funding & Liquidity Progress(1) ▪ Issued $1B of 5-yr unsecured debt at ~6% ▪ $14.7B of debt, up $0.7 from 3/31/17 ▪ Unsecured debt of $6.6B (45%) ▪ Issued ~$600MM of 3-yr revolving ABS at ~3% ▪ ABS debt of $8.1B (
Slide 11: Capital Structure
Capital Structure Continued progress toward achieving target leverage and capital levels Tangible Leverage* Tangible Equity* ($ in millions, unless otherwise noted) 10.4x (1) 9.8x 9.9x 1H17 2017E ~9.0x C&I Adjusted Net Income * $213 $508 - $542 ~7.0x (2) Other After-Tax Impacts ($138) ($225) Net Inc
Slide 12: 2017 Outlook
2017 Outlook C&I Adjusted Diluted EPS* C&I Receivables & Credit Estimates ▪ Full year ENR ($B): $14.8 - $15.2 $3.75 - $4.00 $3.60 ▪ 3Q17 ENR ($B): $14.4 - $14.6 ▪ 3Q17 ANR ($B): ~$14.2 $1.77 $1.28 ▪ Full year net charge-offs: ~7% ▪ 2H17 net charge-offs: mid 6’s 2014 2015 2016 2017 Est. *See appendix
Slide 13: Appendix
% OneMain. Lending Made Personal Appendix 13
Slide 14: Credit Performance – Springleaf (C&I)
Credit Performance – Springleaf (C&I) Secured lending continues to drive improved credit performance (1) Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 days past due at 6 months on book Secured charge-offs more than 50% lower than unsecured 53% 57% 3.0% 3.2% 46% 2.6
Slide 15: Credit Performance – Former OneMain (C&I)
Credit Performance – Former OneMain (C&I) Secured lending expected to drive loss improvements (1) Portfolio Mix Portfolio Vintage Performance Secured loans as a % of portfolio 60 daysBypast Origination due at 6Vintage months on book 29% in 2Q17 2016 vintage impacted by integration related activities
Slide 16: Components of Other After-Tax Impacts
Components of Other After-Tax Impacts ($ in millions) 1H17 2H17 2017 FY Actual Estimate Estimate SpringLeaf Debt Discount Accretion ($44) ($26) ($70) OMFH LLR Provision Catch-up (33) (17) (50) OMFH Receivable Premium Amort (88) (62) (150) OMFH Receivable Discount 33 17 50 (1) Acquisition & Integrati
Slide 17: Consolidated Income Statement (GAAP)
Consolidated Income Statement (GAAP) (unaudited, in millions, except per share statistics) 2Q17 1Q17 4Q16 3Q16 2Q16 FY16 FY15 Finance Charges $768 $756 $765 $763 $723 $3,036 $1,870 Finance Receivables Held for Sale Originated as Held for Investment 4 3 3 7 18 74 60 Total Interest Income 772 759 768
Slide 18: Consolidated Balance Sheet (GAAP)
Consolidated Balance Sheet (GAAP) (unaudited, in millions) 6/30/17 3/31/17 12/31/16 9/30/16 6/30/16 Cash and Cash Equivalents $862 $787 $579 $658 $742 Investment Securities 1,750 1,755 1,764 1,788 1,744 Net Finance Receivables: Personal Loans and Retail Sales Finance 13,916 13,249 13,588 13,669 13,5
Slide 19: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 2Q17 1Q17 4Q16 3Q16 2Q16 FY16 FY15 Pretax Income (Loss) - Segment Accounting Basis $144 $142 $136 $179 $206 $688 $345 Net Loss on Repurchases and Repayments of Debt 16 1 1 0 5 14 0 Net Gain on Sale of Personal Loans 0 0 0 0 (22) (22) 0 Acq
Slide 20: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, in millions) 6/30/17 3/31/17 12/31/16 9/30/16 6/30/16 Consumer & Insurance $13,856 $13,157 $13,455 $13,485 $13,304 Acquisition & Servicing 0 0 0 0 0 Other 156 164 176 237 249 Segment to GAAP Adjustment 38 67 101 148 204 Net Finance Receivables Held for
Slide 21: Consumer and Insurance Segment (Non-GAAP)
Consumer and Insurance Segment (Non-GAAP) (unaudited, in millions, except per share statistics) 2Q17 1Q17 4Q16 3Q16 2Q16 FY16 FY15 Finance Charges $801 $798 $821 $827 $817 $3,272 $1,439 Finance Receivables Held for Sale Originated as Held for Investment 0 0 0 0 14 56 43 Total Interest Income 801 798
Slide 22: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, in millions) 2Q17 1Q17 4Q16 3Q16 2Q16 FY16 FY15 Revenue (1) 26.6% 26.8% 27.6% 28.1% 28.2% 28.0% 29.1% Net Charge-Off (2) (6.9%) (8.5%) (7.5%) (6.2%) (7.0%) (7.1%) (5.6%) Risk Adjusted Margin 19.8% 18.3% 20.1% 21.9% 21.2% 20.9% 23.5% Operati
Slide 23: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, in millions) 2Q17 1Q17 4Q16 3Q16 2Q16 FY16 FY15 Gross Charge-Off $266 $313 $281 $236 $259 $1,050 $365 Gross Charge-Off Ratio (1) 7.9% 9.6% 8.3% 7.0% 7.8% 7.8% 6.4% Recovery $35 $36 $28 $26 $28 $102 $46 Recovery Ratio 1.0% 1.1% 0.8% 0.8% 0.8%
Slide 24: 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 25: Acquisitions and Servicing Segment (Non-GAAP)
Acquisitions and Servicing Segment (Non-GAAP) (unaudited, in millions) 2Q17 1Q17 4Q16 3Q16 2Q16 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 26: Other (Non-GAAP)
Other (Non-GAAP) (1) (unaudited, in millions) 2Q17 1Q17 4Q16 3Q16 2Q16 FY16 FY15 Finance Charges $2 $4 $5 $4 $13 $35 $63 Finance Receivables Held for Sale Originated as Held for Investment 4 2 3 7 3 16 13 Total Interest Income 6 6 8 11 16 51 76 Interest Expense (5) (6) (6) (9) (15) (43) (268) Provis
Slide 27: Reconciliation of Balance Sheet Metrics
Reconciliation of Balance Sheet Metrics Prior to 310-30 Policy Change (unaudited, in millions) 6/30/17 3/31/17 12/31/16 9/30/16 6/30/16 12/31/15 Total Assets $18,698 $17,973 $18,123 $18,353 $18,544 $21,056 Less: Goodwill (1,422) (1,422) (1,422) (1,422) (1,422) (1,440) Less: Other Intangible Assets (