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| 8-K - 8-K - General Motors Financial Company, Inc. | q220178-kinvestorpresentat.htm |
Strategic and Operational
Overview
July 27, 2017
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,” “intend,” “plan,” “may,” “likely,” “should,” “estimate,” “continue,” “future” or "anticipate" and
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, 2016.
Such risks include - but are not limited to - GM’s ability to sell new vehicles that we finance in the markets we serve; the
viability of GM-franchised dealers that are commercial loan customers; the availability and cost of sources of financing;
our joint venture in China, which we cannot operate solely for our benefit and over which we have limited control; the
level of net charge-offs, delinquencies and prepayments on the loans and leases we originate; the effect, interpretation or
application of new or existing laws, regulations, court decisions and accounting pronouncements; the prices at which
used cars are sold in the wholesale auction markets; vehicle return rates and the residual value performance on vehicles
we lease; interest rate fluctuation and certain related derivatives exposure; foreign currency exchange rate fluctuations;
our financial condition and liquidity, as well as future cash flows and earnings; changes in general economic and
business conditions; competition; our ability to manage risks related to security breaches and other disruptions to our
networks and systems; changes in business strategy, including expansion of product lines and credit risk appetite,
acquisitions and divestitures; and risks and uncertainties associated with the consummation of the sale of GM's
Opel/Vauxhall businesses, certain other assets in Europe and certain of our European subsidiaries and branches to
Peugeot S.A., including satisfaction of closing conditions. If one or more of these risks or uncertainties materialize, or if
underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or
projected. 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.
Unless otherwise noted, current and prior period information excludes Discontinued Operations and reflects results for
North America, Latin America and China.
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 $80.5B, with
global operations covering
~90% of GM’s worldwide sales
− Offering auto finance products
to 14,000 dealers worldwide
GM Financial is a strategic business for
GM and well positioned for profitable
growth and contribution to overall
enterprise value
Unless otherwise noted, current and prior period information excludes
Discontinued Operations and reflects results for North America, Latin America
and China
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 of $1.5-2.0B when full captive penetration levels are achieved on a consistent basis
5
GM Financial Evolution
Full captive evolution substantially complete; GMF now in captive expansion phase
International
Acquisition
Commercial
Lease
Launch
GM Lease
Exclusivity
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
U.S. Prime
Loan
Launch
U.S. Prime
Loan
Expansion
Commercial
Loan Launch
2016
U.S. Lease
Share
Expansion
GM Loan
Subvention
Exclusivity
2017
Captive
Expansion
Increase share of
prime loan in the U.S.
Strategically grow
U.S. floorplan
Expand Customer
Relationship
Management
Maintain dominant GM
share in Latin America
6
Strong Operating Results
1. As an annualized percentage of average retail finance receivables
2. As an annualized percentage of average earning assets
$679
$763
$585
CY-15 CY-16 H1 2017
Pre-tax Income from Continuing
Operations ($M)
North America International
2.4% 2.4%
2.0%
CY-15 CY-16 H1 2017
Net Charge-offs on Loans1
$34.0
$39.7
$23.9
CY-15 CY-16 H1 2017
Origination Volume ($B)
Latin America Retail Leases Latin America Retail Loans
North America Retail Leases North America Retail Loans
2.7%
2.1%
1.8%
CY-15 CY-16 H1 2017
Operating Expense Ratio2
7
Solid Balance Sheet
$47.9
$68.6
$80.5
Dec-15 Dec-16 Jun-17
Ending Earning Assets ($B)
Retail Loans Retail Leases Commercial Loans
$13.0 $12.2
$17.0
Dec-15 Dec-16 Jun-17
Liquidity ($B)
Borrowing capacity Cash
Ending earning assets shifting to predominantly higher credit quality assets
driven by growth in North America
‒ North America retail loan portfolio was 32% of ending earning assets at June 30, 2017;
finance receivables with FICO scores <620 comprise 41% of the North America retail loan
portfolio at June 30, 2017, compared to 55% at June 30, 2016
North America sub-prime loan portfolio (<620 FICO) represented approximately 13%
of ending earning assets at June 30, 2017, compared to 18% at June 30, 2016
Liquidity at June 2017 impacted by increased cash and unencumbered assets
eligible to be pledged resulting from the issuance of unsecured debt
8
Solid Balance Sheet (cont.)
Tangible net worth is net of accumulated losses on foreign exchange translation
‒ Accumulated other comprehensive loss related to FX of $1.1B at June 30, 2017
Leverage increase consistent with earning asset expansion in higher credit
quality tiers and remains within the applicable level of the Support Agreement
‒ June 2017 leverage ratio impacted by the partial recognition of the disposal loss associated
with the sale of the European Operations
1. Includes Discontinued Operations
2. Calculated consistent with GM/GMF Support Agreement, filed on Form 8-K with the Securities and Exchange Commission on September 4, 2014
3. December 31, 2015 and December 31, 2016 ratios as originally reported
$6.9
$7.5
$8.0
Dec-15 Dec-16 Jun-17
Tangible Net Worth1 ($B)
8.28x
10.41x
11.48x
Dec-15 Dec-16 Jun-17
Leverage Ratio1,2,3
9
1. Measured at each calendar quarter
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% voting 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:
Additional support evidenced by GM’s $6.4B investment to date in GMF
There is no “step back” provision, once an asset threshold is reached the leverage limit does
not revert back if net earning assets subsequently fall below the attained threshold
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, 2017
10
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 Stable BBB BBB Stable
Moody’s I.G. Baa3 Stable Baa3 Baa3 Stable
Standard and Poor’s BBB BBB Stable BBB BBB Stable
Committed to Investment Grade
Investment grade status achieved with all agencies and aligned with GM’s ratings
− January 2017, Standard and Poor’s and Moody’s upgrade to BBB and Baa3, respectively; outlook stable
− June 2017, Fitch upgrade to BBB; outlook stable
Investment grade rating critical for captive strategy execution
GM targeting performance consistent with “A” ratings criteria
11
Senior Notes
48%
Securitizations
38%
Credit
Facilities
14%
Credit facilities
− Committed credit facilities totaling $25.0B provided by 27 banks
Additionally, $2.3B drawn on uncommitted credit facilities
Global securitization platforms
− Segregated by asset type and geography - current platforms:
− Year-to-date issued $6.5B in public secured debt; projected CY
2017 issuances: ~$12-14B, including 144A transactions
− Private amortizing securitizations are used to augment/diversify
funding
Global senior notes platform
− Supporting operations in U.S., Canada and Mexico
− Will continue to be regular issuer off EMTN shelf to support U.S.
funding needs
− Year-to-date issued $10.0B in unsecured debt; projected CY 2017
issuances: ~$11-13B, 6-8 offerings
Unsecured debt 51% of total debt at June 30, 2017
AMCAR – U.S. sub-prime retail loan GCOLT – Canada lease
GMALT – U.S. lease GMCAR – U.S. prime retail loan
GFORT – U.S. floorplan
Funding Platform
$78.5B
Shifting funding mix toward unsecured debt thereby increasing unencumbered assets; strategy
to fund locally with flexibility to issue globally to support U.S. growth
At June 30, 2017
12
Operating Metrics
13
GM and GMF Penetration Statistics
(Quarterly) Jun-17 Mar-17 Jun-16
GMF as a % of GM Retail Sales
U.S. 42.6% 50.4% 34.3%
Latin America1 59.2% 60.5% 53.5%
GMF Wholesale Dealer Penetration
U.S. 18.2% 16.9% 14.2%
Latin America 95.3% 97.0% 95.4%
GM as % of GMF Retail Originations
(GM New / GMF Retail Loan and Lease)
U.S. 87.8% 86.9% 87.1%
Latin America 94.7% 94.2% 96.0%
In the U.S., GM retail sales penetration increased compared to Q2 2016 driven by GM lease
share and down payment assistance promotion driving increased loan volume
In Latin America, GM retail sales penetration increased year-over-year due to strong joint
campaign activity with GM
Commercial penetration in the U.S. continues to increase with success of refreshed Dealer
Dividends program
1. GMF penetration of GM retail sales for all periods presented was revised to more closely align with GM’s regional definition
of retail sales.
14
Retail Loan Originations
GMF as % of
GM New U.S. <620
GMF as a % of
GM New U.S. ≥620
Weighted Avg.
FICO Score
36%
10%
659
30%
12%
686
29%
12%
682
45%
33%
703
Q2 2017 GM New origination volume up year-over-year due to down payment assistance
promotion driving increased loan volume
48%
23%
698
$0.7 $0.8 $0.9 $0.8 $0.9
$0.6 $0.6 $0.6 $0.7 $0.7
$0.5 $0.6 $0.6
$0.7 $0.6
$1.4
$2.2 $1.8
$3.4 $3.1 $3.2
$4.2
$3.9
$5.6
$5.3
$24.1
$25.4
$26.4
$29.3
$31.1
$19.4
$20.8
$21.8
$24.4
$26.0
Jun-16 Sept-16 Dec-16 Mar-17 Jun-17
NA loans originated on new
vehicles by GM dealers ($B)
NA loans originated on used
vehicles by GM dealers ($B)
NA loans originated on vehicles
by non-GM dealers ($B)
LA loans originated ($B)
Total Continuing Operations
retail finance receivables
portfolio, net of fees ($B)
NA retail finance receivables
portfolio, net of fees ($B)
15
Retail Loan Credit Performance
June 2017 net charge-off percentage is down compared to June 2016 due to positive
impact of credit mix shift to prime
North America recovery rates are expected to be lower for the second half of 2017
due to softer used car prices and normal seasonality
North America
Recovery Rate
52% 50% 52% 54% 55%
2.2%
2.5% 2.6%
2.3%
1.7%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Jun-16 Sept-16 Dec-16 Mar-17 Jun-17
Delin
q
u
enc
y
Ne
t C
h
a
rg
e
-o
ff
s
Credit Metrics Total Continuing
Operations net charge-
offs as an annualized
% of avg. retail finance
receivables
Total Continuing
Operations 31-60 day
delinquency
Total Continuing
Operations 60+ day
delinquency
16
U.S. Retail Loan Origination Mix by Credit Tier
U.S. origination mix continuing to shift to prime credit tiers, comprising 59% of
retail loan originations in June 2017 quarter
1. For originations associated with the commercial vehicle program, FICO scores or equivalents are used in determining prime, near-
prime and sub-prime classifications
Three Months Ended
($M)1 Jun-17 Jun-16
Amount Percent Amount Percent
Prime – FICO Score 680 and greater $2,587 59.0% $1,066 42.2%
Near prime – FICO Score 620 to 679 626 14.3% 416 16.4%
Sub-prime – FICO Score less than 620 1,171 26.7% 1,047 41.4%
Total originations $4,384 100.0% $2,529 100.0%
17
$0
$20
$40
$60
$80
$100
$120
$140
$160
Total Quarterly Industry Auto Loan
Originations ($B)
<620 FICO 620-679 FICO 680+ FICO
U.S. Sub-prime Loan Credit Performance
Source: Equifax Credit Trends and
GMF calculation
Industry growth in auto loan originations driven primarily by prime
credit (680+ FICO)
GMF sub-prime portfolio outperforming peers
6.5%
3.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Monthly Net Credit Losses
% of Average Receivables (Annualized)
Wells Fargo Sub-Prime Auto Index GMF AMCAR Portfolio
18
0%
1%
2%
3%
4%
5%
6%
7%
8%
0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48
%
o
f Funded
Doll
ar
s
Months Since Funding
U.S. Consumer APR
Cumulative Vintage Net Charge Off Dollars %
Total Portfolio
2010
2011
2012
2013
2014
2015
2016
2017
U.S. Retail Vintage Loan Net Charge-Off Performance
For more recent total vintages, performance benefiting from shift to more prime
credit quality originations and loan subvention exclusivity
For vintage originations <620 FICO, since the recession, sub-prime cumulative
vintage net charge-offs have been normalizing
− 2016 vintage is trending in line with 2015
− Stable underwriting criteria and collateral characteristics across sub-prime vintages
0%
1%
2%
3%
4%
5%
6%
7%
8%
0 3 6 9 12 15 18 21 24 27 0 33 36 39 42 45 48
%
o
f Funded
Doll
ar
s
Months Since Funding
U.S. Consumer APR
Cumulative Vintage Net Charge Off Dollars %
FICO: <620
2010
2011
2012
2013
2014
2015
2016
2017
U.S. Consumer Loan
Cumulative Vintage Net Charge Off Dollars %
Total Originations
U.S. Consumer Loan
Cumulative Vintage Net Charge Off Dollars %
Originations <620 FICO
19
Lease Portfolio
Origination volume directly corresponds to GM sales attributable to lease
U.S. lease portfolio, at June 30, 2017:
− Over 1.4 million contracts with a balance of $37.4B
− 95% of lease portfolio had a FICO score at origination greater than 620
− 99% of operating leases were current with respect to payment status
$6.1 $5.8 $5.6 $6.0 $6.2
$0.4
$0.3 $0.3
$0.3
$0.5
$6.5
$6.1 $5.9
$6.3
$6.7
$28.3
$31.6
$34.3
$37.1
$39.7
Jun-16 Sept-16 Dec-16 Mar-17 Jun-17
Other Lease Volume* ($B)
U.S. Lease Volume ($B)
Total Continuing Operations
Lease Portfolio ($B)
1. Canada and Latin America
1
20
U.S. Residual Value
GM and GMF jointly support residual values
− GM through the management of the retail/fleet
strategy, incentive spend, inventory management,
Express Drive and Factory Pre-Owned Collection
− GMF through its comprehensive end-of-term
remarketing process, designed to support GM
dealer base while maximizing resale values
GMF Dealer Source, a private-label online
wholesale marketplace, provides single-source
online access to purchase a wide range of pre-
owned GM vehicles, including off-lease, rental
vehicles and GM company vehicles
Residual performance on returned vehicles2
‒ Residual performance remains lower year-over-
year, especially for CUVs, but performance in
the June 2017 quarter was generally stable to
the March 2017 quarter
‒ Expect used car prices to decline ~7% during
2017, with potential further moderation in 2018
primarily due to an increased supply of used
vehicles
1. Reflects average per unit gain/(loss) on vehicles returned to GMF and sold in the period
2. Vehicles not purchased by the lessee or dealer at contract residual value that are returned to and remarketed by GMF
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
90%
95%
100%
105%
110%
115%
120%
2016Q2 2016Q3 2016Q4 2017Q1 2017Q2
Vo
lum
e
Re
sid
ua
l Rea
lizat
ion
-
Ga
in/(Lo
ss
)
Sale Quarter
Quarterly U.S. GMF Gross Proceeds vs. ALG Residuals at Origination1
2016Q2 - 2017Q2 Sales
(Avg % Per Unit)
Car Sales
CUV/SUV/Truck Sales
Car Avg G(L)
CUV/SUV/Truck Avg G(L)
Total Avg G(L)
21
Commercial Lending
Experiencing steady growth in number of dealers and receivables outstanding
− U.S. dealers totaled 827 at June 30, 2017, a 25% increase year-over-year
At June 30, 2017, floorplan financing represented more than 91% of commercial
portfolio
$4.8 $5.3
$6.5 $7.0
$8.3
$1.2
$1.3
$1.4
$1.5
$1.4
$6.0
$6.6
$7.9
$8.5
$9.7
1,279
1,305
1,356
1,385
1,459
Jun-16 Sept-16 Dec-16 Mar-17 Jun-17
Latin America Commercial Finance
Receivables Outstanding ($B)
North America Commercial Finance
Receivables Outstanding ($B)
Number of Dealers for Continuing
Operations
22
SAIC-GMAC – China Joint Venture
GMF owns a 35% equity stake in SAIC-GMAC joint venture
− Joint venture began operations in 2004
− Ownership stake gives GMF a presence in the largest auto market
− Results reflected in financial statements under equity method
China market:
− GM’s market share for Q2 2017 was 13.9%; industry forecasted to grow in the low single digits in 2017
− Car purchases are primarily for cash in China; financing penetration relatively low compared to other regions
− Relative to the U.S., auto loans typically have higher down payments, lower LTVs and lower charge-offs
1. SAIC General Motors Corporation Limited
2. Includes off-balance sheet contracts originated for third parties
20.2%
29.3%
31.6%
CY-15 CY-16 H1 2017
China JV as a % of SGM1 Retail
Sales2
$5.9
$8.3
$3.9
CY-15 CY-16 H1 2017
Retail Origination Volume2 ($B)
23
SAIC-GMAC – China Joint Venture
1. Commercial finance receivables are not netted with dealer deposits, in comparison to GMF U.S. GAAP presentation
2. As an annualized percentage of average retail finance receivables
Favorable results driven by:
1. Portfolio growth
2. Increasing penetration of SGM retail sales
3. Favorable credit dynamics
$6.9
$8.5 $8.5
$3.3
$2.6 $3.5
$10.2
$11.1
$12.0
Dec-15 Dec-16 Jun-17
Ending Earning Assets1 ($B)
Retail Loans Commercial Loans
0.6%
0.3%
0.1%
CY-15 CY-16 H1 2017
Net Charge-offs on Loans2
$116
$151
$88
CY-15 CY-16 H1 2017
Equity Income ($M)
24
GM Financial Key Strengths
Strategic interdependence with GM
− GM priority to grow GM Financial
− Expansion of captive presence in the U.S.; continuing captive penetration levels outside the
U.S.
Full suite of auto finance solutions offered in served markets with incremental
growth opportunities
− Operations covering ~90% of GM’s worldwide sales
− Additional product offerings and enhancements
− Growing finance penetration in China provides opportunity for increased profitability
Solid global funding platform supported by investment grade ratings
− Committed bank lines, well-established 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 $17.0B at June 30, 2017
− Earned $585M in pre-tax income from continuing operations in H1 2017; expect full-year
earnings to exceed full-year 2016 earnings from continuing operations of $763M
Second half earnings will be down from first half due to: (1) lower year-over-year and seasonally weaker
used car pricing; (2) higher lease returns; and (3) re-timing of infrastructure spend
Experienced and seasoned management team operating across business and
economic cycles
For more information, visit
gmfinancial.com