Attached files
| file | filename |
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| 8-K - 8-K - General Motors Financial Company, Inc. | q220168-kinvestorpresentat.htm |
Strategic and Operational
Overview
July 22, 2016
Exhibit 99.1
2
Safe Harbor Statement
This presentation contains several “forward-looking statements.” Forward-looking statements are those that use words
such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “may,” “likely,” “should,” “estimate,” “continue,” “future” or other
comparable expressions. These words indicate future events and trends. Forward-looking statements are our current
views with respect to future events and financial performance. These forward-looking statements are subject to many
assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from
those anticipated by us . The most significant risks are detailed from time to time in our filings and reports with the
Securities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2015.
Such risks include - but are not limited to - changes in general economic and business conditions; GM’s ability to sell
new vehicles that we finance in the markets we serve in North America, Latin America, China and Europe, particularly
the United Kingdom where automobile sales may be negatively impacted due to the passage of the referendum to
discontinue membership in the European Union; interest rate and currency fluctuations; our financial condition and
liquidity, as well as future cash flows and earnings; competition; the effect, interpretation or application of new or existing
laws, regulations, court decisions and accounting pronouncements; the availability and cost of sources of financing; the
level of net charge-offs, delinquencies and prepayments on the loans and leases we originate; vehicle return rates and
the residual value performance on vehicles we lease; the viability of GM-franchised dealers that are commercial loan
customers; the prices at which used cars are sold in the wholesale markets; and changes in business strategy, including
expansion of product lines and credit risk appetite, and acquisitions. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, actual events or results may differ materially. It is advisable not
to place undue reliance on any forward-looking statements. We undertake no obligation to, and do not, publicly update or
revise any forward-looking statements, except as required by federal securities laws, whether as a result of new
information, future events or otherwise.
3
GM Financial Company Overview
GM Financial’s overall objective is to support GM vehicle sales while
achieving appropriate risk-adjusted returns
GM Financial (GMF) is General
Motors’ global captive finance
company
Earning assets of $69B, with
operations in more than 20 countries
− Offering auto finance products to
16,000 dealers worldwide
− GM Financial’s global footprint covers
over 85% of GM’s worldwide sales
GM Financial is a strategic business for GM and well positioned for profitable
growth and contribution to overall enterprise value
North American segment
International segment
4
General Motors Strategic Priorities
GM Financial strategic value
− Drive vehicle sales
Offer attractive products and services with efficient delivery
− Enhance customer experience and loyalty
Integrate with GM initiatives to enrich the customer experience and increase retention
− Support GM Customers and Dealers
Provide financing support across economic cycles
− Contribute to enterprise profitability
Pre-tax income expected to double from 2014 when full captive penetration levels are achieved
5
GM Financial Evolution
Full captive evolution substantially complete; entering captive expansion phase
China
Acquisition
GM Financial
Acquisition
2010 2015
U.S.
Floorplan
Launch
2011 2012 2014
NA Lease
Launch
2013
Canada Lease
Acquisition of
FinancialLinx
Canada sub-prime
Launch
Canada
Floorplan
Launch
International
Acquisitions
U.S. Prime
Loan
Launch
Commercial
Lease
Launch
GM Lease
Exclusivity
U.S. Prime
Loan
Expansion
Commercial
Loan Launch
2016
U.S. Lease
Share
Expansion
GM Loan
Subvention
Exclusivity
Captive
Expansion
Increase share of
prime loan in NA
Strategically grow
NA floorplan
Expand Customer
Relationship
Management
Maintain IO’s
dominant GM share;
potential
geographic/product
expansion
6
Strong Operating Results
$815
$837
$491
CY-14 CY-15 H1 2016
Pre-tax Income ($M)
North America (NA) International (IO)
$21.3
$37.7
$21.6
CY-14 CY-15 H1 2016
Origination Volume ($B)
NA Retail Loans NA Retail Leases
IO Retail Loans IO Retail Leases
3.2%
2.7%
2.2%
CY-14 CY-15 H1 2016
Annualized Operating
Expense Ratio
1.8% 1.9% 1.8%
CY-14 CY-15 H1 2016
Net Annualized Charge-offs
on Loans
7
Solid Balance Sheet
Tangible net worth is net of accumulated losses on foreign exchange translation
‒ Accumulated other comprehensive loss related to FX of $1.0B at June 30, 2016
Leverage increase consistent with earning asset expansion in higher credit quality tiers
1. Calculated consistent with GM/GMF Support Agreement, filed on Form 8-K with the Securities and Exchange Commission on
September 4, 2014.
$40.8
$57.7
$68.7
Dec-14 Dec-15 Jun-16
Ending Earning Assets ($B)
Retail Loans Commercial Loans Retail Leases
Dec-14 Dec-15 Jun-16
Liquidity ($B)
Borrowing capacity Cash
$9.3
$14.7
$15.4
$6.1
$6.9 $7.3
Dec-14 Dec-15 Jun-16
Tangible Net Worth ($B)
6.5x
8.3x
9.3x
Dec-14 Dec-15 Jun-16
Leverage Ratio1
8
Earning Assets Composition
Earning assets evolving to more
captive-like mix with 85% of earning
assets related to financing GM new
vehicles
Portfolio shifting to predominantly
higher credit quality assets
− Sub-prime loan portfolio (<620 FICO)
represented approximately 16% of ending
earning assets at June 30, 2016
Earning asset expansion in North
America more aligned with GM’s
geographic sales footprint
Lease 13%
Lease 13%
$68.7B
At June 30, 2016
Earning assets composition is shifting towards full captive state
Latin
America
Commercial
2%
Latin
America
Retail 7%
Europe
Commercial
5%
Europe
Retail 10%
North
America
Commercial
7%
North
America
Lease 41%
North
America
Retail 28%
9
Funding Platform
Credit facilities
− Totaling $24.8B, provided by 35 banks at June 30, 2016
Global securitization platforms
− Segregated by asset type and geography - current platforms:
AMCAR - U.S. sub-prime retail loan ▪ GFORT - U.S. floorplan
GMALT - U.S. lease ▪ ECARAT U.K. - retail loan
ECARAT Germany - retail loan
− Anticipate launching U.S. prime retail loan platform in 2017
− Projected 2016 CY issuances: ~$11-14B, including 144A
transactions
− Private amortizing securitizations are used to augment/diversify
funding
Global senior notes platform
− Supporting operations in U.S., Canada, and Europe
− Projected 2016 CY issuances: ~$10-13B, 5-8 offerings
In the second half of 2016, evaluating incremental Euro issuance
off of the EMTN platform to support funding needs in the U.S.
Other
− Retail bank deposits in Germany, $1.8B at June 30, 2016
Unsecured debt 47% of total debt at June 30, 2016
1. International unsecured credit facilities were 5% and secured credit
facilities were 6% of total debt outstanding
At June 30, 2016
$64.5B
Shifting funding mix toward unsecured debt thereby increasing unencumbered assets; strategy
to fund locally with flexibility to issue globally to support North America growth
North
America
Securitization
36%
North
America Sr
Notes 35%
North
America
Credit
Facilities 6%
International
Securitization
5%
International
Credit
Facilities
11%1
International
Sr Notes 3%
International
Other
Unsecured
4%
10
1. Measured at each calendar quarter and calendar year end
Financial Support from GM
Support Agreement in place between GM and GMF
‒ Agreement solidifies GMF’s position as a core component of GM’s business and strengthens GMF’s capability
to support GM’s strategy
‒ Five-year agreement that automatically renews annually in September
Requires 100% ownership of GMF by GM as long as GMF has unsecured debt securities
outstanding
Solidifies GMF’s liquidity position
‒ Junior subordinated unsecured credit line of $1.0B from GM; renews with Support Agreement renewal
‒ Maintains GMF’s access to GM’s revolvers with sublimit availability of $4.0B
Establishes leverage limits and provides funding support to GMF if needed
‒ Leverage limits (Net Earning Assets divided by Adjusted Equity, which includes amounts outstanding on the
Junior Subordinated Revolving Credit Facility, if any) above the thresholds triggers funding request from GMF
to GM:
− Leverage ratio could temporarily exceed the applicable level at September 30, 2016 and if so, we intend to
borrow on the GM Junior Subordinated Revolving Credit Facility; we expect ratio to be within applicable level
and borrowing repaid by December 31, 2016
Additional support evidenced by GM’s $6.4B investment to date in GMF
GMF’s Net Earning Assets1 Leverage1
Less than $50B 8.0:1.0
Greater than or equal to $50B but less than $75B 9.5:1.0
Greater than or equal to $75B but less than $100B 11.5:1.0
Greater than or equal to $100B 12.0:1.0
At June 30, 2016
11
Current Ratings
GM GM Financial
Company
Rating
Bond
Rating Outlook
Company
Rating
Bond
Rating Outlook
DBRS BBB N/A Stable BBB BBB Stable
Fitch BBB- BBB- Positive BBB- BBB- Positive
Moody’s I.G. Ba1 Positive Ba1 Ba1 Positive
Standard and Poor’s BBB- BBB- Positive BBB- BBB- Positive
Committed to Investment Grade
Investment grade status achieved with S&P, Fitch and DBRS consistent with GM’s
ratings
− February 2016, Moody’s changed outlook to positive
− March 2016, DBRS upgrade to BBB, trend stable
− April 2016, Standard and Poor’s changed outlook to positive
− June 2016, Fitch changed outlook to positive
Achievement of investment grade rating critical for captive strategy execution
GM targeting performance consistent with “A” ratings criteria
12
North America
13
GM and GMF Penetration Statistics
Jun-16 Mar-16 Jun-15
GMF as a % of GM Retail Sales
U.S. 34.3% 37.5% 30.2%
Canada 17.9% 23.2% 25.1%
GMF Wholesale Dealer Penetration
U.S. 14.2% 13.7% 10.8%
Canada 12.0% 11.8% 11.0%
GM as % of GMF Retail Originations
(GM New / GMF Retail Loan & Lease)
U.S. 87.1% 88.8% 82.6%
Canada 98.8% 99.6% 98.9%
GMF penetration of GM retail sales largely dependent on level of GM support for
subvented products in the market
‒ June 2016 quarter impacted by lower GM lease and subvented loan mix compared to March 2016 quarter
14
Origination Mix by Credit Tier
Three Months Ended
(Quarterly Loan and Lease Originations, $M)1 Jun-16 Jun-15
Amount Percent Amount Percent
Prime – FICO Score 680 and greater $6,207 69.0% $5,147 62.6%
Near prime – FICO Score 620 to 679 1,171 13.0% 1,384 16.8%
Sub-prime – FICO Score less than 620 1,614 18.0% 1,698 20.6%
Total loan and lease originations $8,992 100.0% $8,229 100.0%
Origination mix shifting to higher prime credit tiers, driven by an increase in GM lease
penetration and in GMF prime loan originations
1. For originations associated with the commercial vehicle program, FICO scores or equivalents are used in determining prime, near-prime and sub-prime classifications
15
Retail Loan Originations
GMF as % of
GM U.S. <620
GMF as a % of
GM U.S. ≥620
32%
9%
32%
14%
32%
14%
38%
10%
36%
10%
Weighted average FICO score in the June 2016 quarter continues to trend
positively
$0.7 $0.6 $0.5 $0.5 $0.6
$0.6 $0.6
$0.5 $0.5 $0.5
$1.3
$2.0
$1.9 $1.6 $1.4
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
O
ri
ginat
io
n
s
(
$
B
)
Loans originated on
new vehicles by
GM dealers
Loans originated on
used vehicles by
GM dealers
Loans originated on
vehicles by non-GM
dealers
$3.2
$2.6
$2.9
$2.5 $2.6
16
Retail Loan Credit Performance
Credit performance reflects portfolio mix shift to prime
− Finance receivables with FICO scores <620 comprise 55% of the North America retail loan portfolio
at June 30, 2016, compared to 71% at June 30, 2015
Recovery rates are expected to continue trending down throughout 2016
Net annualized
charge-offs
31-60 day
delinquency
61+ day
delinquency
Recovery
Rate
56% 53% 54% 55% 59%
2.4%
2.7%
3.0%
2.6%
2.3%
0.0%
2.0%
4.0%
6.0%
8.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
De
linqu
e
nc
y
Net
A
nnua
liz
e
d
Charg
e
-o
ff
s
Credit Metrics
17
Lease Originations
Year-over-year origination volume up driven by increase in GM's U.S. lease
penetration
Credit performance commensurate with the predominantly prime credit portfolio
Favorable residual performance driven by truck and SUV values
$5.1
$5.9
$5.2
$6.5 $6.1
$0.4
$0.3
$0.2
$0.2
$0.3
$12.8
$16.8
$20.1
$24.4
$28.3
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
Canada Lease Volume ($B)
U.S. Lease Volume ($B)
Lease Portfolio ($B)
18
Commercial Lending
Floorplan financing represents 87% of commercial portfolio
Our expanded product suite and increasing retail finance penetration enhances our value
proposition and opportunity for continued steady growth
$3.5 $3.5
$4.1
$4.4
$4.8
567
607 656
694
721
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
$0
$1
$2
$3
$4
$5
R
e
c
e
iv
a
bl
e
s
O
u
ts
tanding
(
$B
)
Commercial Finance Receivables Outstanding Number of Dealers
19
International Operations
20
GM and GMF Penetration Statistics
Jun-16 Mar-16 Jun-15
GMF as a % of GM Retail Sales
Europe 40.6% 37.3% 38.4%
Latin America 55.2% 55.0% 45.5%
GMF Wholesale Dealer Penetration
Europe 98.8% 99.9% 99.5%
Latin America 95.4% 95.2% 95.9%
GM as % of GMF Retail Originations
(GM New / GMF Retail Loan and Lease)
Europe 80.6% 81.0% 77.3%
Latin America 96.0% 95.3% 94.1%
Continued strong penetration levels in Europe and Latin America, impacted favorably by
GM subvention support programs
21
Retail Loan Originations
Stable origination trend, with foreign exchange impact offsetting volume
increases
− Number of outstanding loan contracts grew to 1.6M for the quarter, an increase of 5%
from June 2015 and 1% from March 2016
$1.0 $0.9 $0.9 $1.0 $1.0
$0.7
$0.7 $0.7
$0.6 $0.7
-50
0
50
100
150
$0.0
$0.5
$1.0
$1.5
$2.0
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
O
ri
ginat
io
n
s
(
$
B
)
Latin America Retail
Loan
Europe Retail Loan
$1.7 $1.6 $1.6 $1.6 $1.7
22
Retail Loan Credit Performance
Credit metrics generally stable, consistent with a predominantly
prime portfolio
Net annualized
charge-offs
31-60 day
delinquency
61+ day
delinquency
0.7% 0.8% 0.9% 0.8% 0.9%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
De
linqu
e
nc
y
Net
A
nnua
liz
e
d
Charg
e
-o
ff
s
Credit Metrics
23
Commercial Lending
At June 30, 2016, commercial finance receivables were comprised of 94%
floorplan and 6% primarily from real estate and dealer loans
− Decline in European commercial receivables compared to March 2016 quarter
primarily driven by appreciation of the U.S. Dollar against foreign currencies
$3.2 $3.2 $3.1
$3.6 $3.4
$1.1 $1.1 $1.3
$1.2
$1.2
2,130 2,153 2,139 2,147 2,146
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
Jun-15 Sep-15 Dec-15 Mar-16 Jun-16
$0
$1
$2
$3
$4
$5
$6
$7
Re
c
e
iv
a
bl
e
s
Outst
a
nding
(
$B
)
Europe Commercial Receivables Outstanding Latin America Commercial Receivables Outstanding
$4.3 $4.4
$4.8
$4.6 $4.3
Number of Dealers
24
SAIC-GMAC - China Joint Venture
GMF owns a 35% equity stake in SAIC-GMAC joint venture
− Joint venture began operations in 2004
− Ownership gives GMF a stake in the largest captive finance company in the largest auto
market
− Results reflected in financial statements under equity method
China market:
− GM’s market share for Q2 2016 was 13.3%; Industry forecasted to grow in the low single digits
in 2016
− Car purchases are primarily for cash in China; financing penetration relatively low compared to
rest of world
− Auto loans typically have high down payment, low LTV and low charge-offs
Jun-16 Mar-16 Jun-15
China JV as a % of SGM1 Retail Sales2 26.1% 23.2% 17.8%
Retail Originations ($B)2 $1.7 $1.7 $1.1
Ending Earning Assets ($B)
Retail $7.1 $7.2 $6.4
Commercial3 $3.1 $3.0 $3.1
Net Retail Charge-offs 0.3% 0.4% 0.6%
Equity Income ($M) $37 $36 $28
1. SAIC General Motors Sales Co., Ltd.
2. Includes off-balance sheet contracts originated for third-parties
3. Commercial receivables are not netted with dealer deposits
25
GM Financial Key Strengths
Strategic interdependence with GM
− GM priority to grow GM Financial
− Expansion of captive presence in North America; captive penetration levels in International
Operations
Full suite of auto finance solutions offered in served markets with incremental
growth opportunities
− Operations covering over 85% of GM’s worldwide sales
− Additional product offerings and enhancements and geographic expansion
Solid global funding platform supported by investment grade ratings
− Committed bank lines, well-established global ABS and unsecured debt issuance programs
− Along with GM, committed to running the business consistent with “A” ratings criteria
Strong financial performance
− Solid balance sheet supporting originations growth
− Liquidity of $15.4B at 6/30/2016
− 2016 YTD earnings before tax of $491M, consistent with full-year earnings outlook to be
slightly higher than 2015
Experienced and seasoned management team operating across business and
economic cycles
