Onemain Holdings, Inc. · NYSE:OMF
Onemain — Q1 2021 Earnings Presentation
31 slides from Onemain's earnings presentation, Apr 27, 2021
Slide 1: OneMain Financial 1Q21 Earnings Presentation
1 OneMain Financial 1Q21 Earnings Presentation (NYSE: OMF) April 26, 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 • Accelerat
Slide 5: 1Q21 Financial Performance Highlights
5 1Q21 Financial Performance Highlights ($ in millions, except per share statistics or unless noted) Earnings Credit (C&I)* YoY YoY 1Q21 1Q20 1Q21 1Q20 Chg. Chg. Net Income $413 $32 1,191% Change in LLR ($208) $234 NM C&I Adj. Net Income*1 $455 $45 911% Net Charge-offs $205 $296 (31%) C&I Change in
Slide 6: 1Q21 Financial Results
1Q21 Financial Results ($ in millions, except Average Net Receivables in billions, and per share statistics) Earnings Summary C&IC&I Adjusted AdjustedEarnings Summary* Earnings Summary* 1Q21 4Q20 1Q20 1Q21 4Q20 1Q20 Consumer & Insurance* $607 $498 $60 Interest Income $1,057 $1,093 $1,101 Other Net R
Slide 7: Future Vision Deepens & Broadens Customer Relationships
Future Vision Deepens & Broadens Customer Relationships Unsecured Insurance Loans Financial Secured Wellness Progress to a Loans Meet the needs Credit better future of today OneMain Builder/ Products & Services Customers Secured that increase Lending products Card Credit engagement, build Card loyal
Slide 8: Trim Acquisition
Trim Acquisition What It Is Key Features Strategic Rationale • A customer-focused financial • Bill negotiation: Negotiates ✓ Fits squarely within OneMain’s mission of wellness fintech cable, internet, and/or phone bills improving the financial well-being of hard- What Does Trim Do? for customers Fea
Slide 9: Strategy Drives Customer Engagement and Growth
Strategy Drives Customer Engagement and Growth ($ 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 10: Originations & Receivables (C&I)
Originations & Receivables (C&I)* ($ in billions unless noted) Originations Highlights • Government stimulus programs combined with normal seasonality impacted loan $3.7 $3.2 demand in 1Q21 $2.9 $2.6 $2.0 $2.3 • Originations of $2.3 in 1Q21 vs. $2.6 in 1Q20 1 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 • Increase
Slide 11: Impact of Stimulus on Originations (C&I)
Impact of Stimulus on Originations (C&I)* ($ in millions unless noted) Highlights • 1Q originations impacted by two rounds of fiscal stimulus (January and March) • However, origination performance improved 4 – 6 weeks following stimulus with February back at 2019 origination levels and improved perf
Slide 12: Delinquency & Net Charge-off Trends (C&I)
Delinquency & Net Charge-off Trends (C&I)* ($ in millions) 30-89 Days Delinquent Net Charge-offs $500 $455 5.00% $350 17.00% $450 $413 $413 $296 $282 $300 $261 15.00% $400 $348 4.00% $232 $205 $250 13.00% $290 $350 2.47% $276 $189 2.26% 2.28% $300 3.00% $200 11.00% $250 1.95% 1.63% 1.57% $150 9.00%
Slide 13: Loan Loss Reserve Trends (C&I)
Loan Loss Reserve Trends (C&I)* ($ in millions) $2,342 $2,342 $2,283 $2,202 ($50) ($158) $2,075 $1,968 Reserve 10.7% 12.0% 13.2% 13.1% 12.6% 11.8% (% of ENR) 1/1/2020 1Q20 2Q20 3Q20 4Q20 Lower ENR Other, 1Q21 incl. Macro FY19 NCO 1.9x 2.1x 2.3x 2.3x 2.2x 2.0x Coverage 1Q21 reserve reduction driven b
Slide 14: Operating Expense Trends (C&I)
Operating Expense Trends (C&I)* (Operating Expenses $ in millions, ANR $ in billions) Quarterly Operating Expenses FY Operating Expenses (3%) $1,290 $1,250 $327 $330 $323 $319 $297 $302 4Q19 1 1Q20 2Q20 3Q20 4Q20 1Q21 FY19 FY20 ANR $18.1 $18.4 $17.9 $17.7 $18.0 $17.8 ANR $17.1 $18.0 Opex/ Opex/ 7.1%
Slide 15: Balance Sheet & Liquidity
Balance Sheet & Liquidity ($ in billions unless noted) Highlights • Completed $45MM of whole loan sales in 1Q21, added second whole loan sale partner and expanded flow agreements to $120MM per quarter for 2 years at a price well above par • Redeemed $650MM of 7.75% bonds utilizing proceeds from debt
Slide 16: Adjusted Capital Roll-Forward
Adjusted Capital* Roll-Forward ($ in millions) Last Three Months Last Twelve Months $1,134 $23 ($954) $299 ($44) ($534) $3,587 $3,308 $3,308 $3,105 4Q20 Ending Capital Other Capital 1Q21 Ending 1Q20 Ending Capital Other Capital 1Q21 Ending Adjusted Generation Returns Adjusted Adjusted Generation Ret
Slide 17: Executing On Disciplined Capital Allocation Framework
Executing On Disciplined Capital Allocation Framework ($ in millions, except per share statistics or unless noted) 1 Ending Net Receivables (C&I)* Fund portfolio growth with loans that meet our risk / return criteria $18,091 $14,820 • $3.3B of growth at 20%+ ROTCE from 2017 to 2020 (7% CAGR) 2017 20
Slide 18: Attractive Valuation & Strong Return Profile
Attractive Valuation & Strong Return Profile Total Shareholder Return LTM Dividend Yield2 2021 P/E Multiple3 (2Y)1 12.9% 122.2% 12.1x 103.0% 9.1x 7.3x 4.0% 38.7% 28.8% 1.5% 0.0% NM OneMain Specialty FinTech Bank OneMain Specialty FinTech Bank OneMain Specialty FinTech Bank Finance Peers Peers Financ
Slide 19: 2021 Strategic Priorities
2021 Strategic Priorities 2019 2020 2021E C&I* Segment Yield 24.1% 24.2% Stable Metrics Interest Expense 5.5% 5.6% 5.0 – 5.2% Net Charge-offs 6.0% 5.5% ~5% Operating Expense Growth 3% (3%) 5 – 7% Balance Sheet Net Leverage* 4.8x 4.3x 4 – 6x * See appendix for reconciliations and disclosures required
Slide 20: Appendix
Appendix OneMain Financial.
Slide 21: Consolidated Income Statements
Consolidated Income Statements (unaudited, $ in millions, except per share statistics) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Interest Income $1,060 $1,096 $1,089 $1,077 $1,106 $4,368 $4,127 Interest Expense (235) (246) (255) (271) (255) (1,027) (970) Provision for Finance Receivable Losses 2 (134) (231
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, $ in millions) 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Cash and Cash Equivalents $1,301 $2,272 $1,944 $2,740 $4,203 Investment Securities 1,951 1,922 1,882 1,862 1,800 Net Finance Receivables 17,564 18,084 17,817 17,721 18,269 Unearned Insurance Pre
Slide 23: Balance Sheet Metrics
Balance Sheet Metrics (unaudited, $ in millions) 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Long-Term Debt $16,789 $17,800 $17,531 $18,010 $20,443 Less: Junior Subordinated Debt (172) (172) (172) (172) (172) Adjusted Debt $16,617 $17,628 $17,359 $17,838 $20,271 Less: Available Cash and Cash
Slide 24: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures (unaudited, $ in millions) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Consumer & Insurance $567 $491 $351 $128 $51 $1,021 $1,168 Other (3) (4) (2) (1) (1) (9) (3) Segment to GAAP Adjustment (18) (11) (8) (9) (7) (35) (67) Income Before Income Taxes - GAAP basis $546 $476
Slide 25: Reconciliation of Non-GAAP Measures (cont'd)
Reconciliation of Non-GAAP Measures (cont’d) (unaudited, $ in millions) 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Consumer & Insurance $17,569 $18,091 $17,826 $17,732 $18,283 Other 0 0 0 0 0 Segment to GAAP Adjustment (5) (7) (9) (11) (14) Net Finance Receivables - GAAP basis $17,564 $18,08
Slide 26: Consumer & Insurance Segment (Non-GAAP)
Consumer & Insurance Segment (Non-GAAP) (unaudited, $ in millions, except per share statistics) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Interest Income $1,057 $1,093 $1,086 $1,074 $1,101 $4,353 $4,114 Interest Expense (233) (242) (250) (266) (249) (1,007) (947) Provision for Finance Receivable Losses 3 (
Slide 27: Consumer & Insurance Segment Metrics (Non-GAAP)
Consumer & Insurance Segment Metrics (Non-GAAP) (unaudited, $ in millions, except per share statistics) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Revenue (1) 26.4% 26.3% 26.4% 25.3% 25.6% 25.9% 26.6% Net Charge-off (4.7%) (4.2%) (5.2%) (6.3%) (6.5%) (5.5%) (6.0%) Risk Adjusted Margin 21.7% 22.1% 21.2% 19.0
Slide 28: Consumer & Insurance Capital Metrics (Non-GAAP)
Consumer & Insurance Capital Metrics (Non-GAAP) (unaudited, $ in millions) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Provision for Finance Receivable Losses ($3) $130 $232 $422 $530 $1,313 $1,105 Less: Net Charge-offs (205) (189) (232) (282) (296) (998) (1,028) Change in C&I Allowance for Finance Receivabl
Slide 29: Consumer & Insurance Credit Metrics (Non-GAAP)
Consumer & Insurance Credit Metrics (Non-GAAP) (unaudited, $ in millions) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Gross Charge-offs $255 $231 $274 $322 $337 $1,163 $1,172 Gross Charge-off Ratio 5.81% 5.12% 6.15% 7.22% 7.36% 6.46% 6.86% Recoveries $50 $42 $42 $40 $41 $165 $143 Recovery Ratio 1.14% 0.94% 0
Slide 30: Other (Non-GAAP)
Other (Non-GAAP) (unaudited, $ in millions) 1Q21 4Q20 3Q20 2Q20 1Q20 FY20 FY19 Interest Income $1 $2 $1 $1 $2 $6 $9 Interest Expense (1) (1) (1) (1) (1) (4) (5) Net Interest Income after Provision for Finance 0 1 0 0 1 2 4 Receivable Losses Other Revenues 4 3 4 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