2 nd Quarter 2017 Earnings Presentation. July 25, 2017

Transcription

1 2 nd Quarter 2017 Earnings Presentation July 25, 2017

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, 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. 2

3 2nd Quarter Operating Highlights 1 June 2017 June 2016 ($M) Quarter Quarter Earnings Before Tax from Continuing Operations $356 $213 Total Originations (Loan & Lease) $12,004 $9,708 Ending Earning Assets $80,500 $58,397 Net Charge-offs as an Annualized % of Avg. Retail Finance Receivables 1.7% 2.2% 1. Unless otherwise noted, current and prior period information excludes Discontinued Operations and reflects results for North America, Latin America and China Operating results Increased penetration of GM retail sales in the U.S. to 43% in the quarter, up from 34% in the June 2016 quarter Grew U.S. retail loan originations in the quarter to $4.4B, an increase of $1.9B year-over-year Increased U.S. prime loan originations ( 680 FICO) to $2.6B in the June 2017 quarter from $1.1B in the June 2016 quarter Credit performance improved in the quarter, impacted by mix shift to prime credit quality assets in the U.S. U.S. disposition proceeds on returned leased vehicles compared to estimates at origination remain lower year-over-year, but residual performance was generally stable in the June 2017 quarter compared to the March 2017 quarter Funding platform expansion Issued $11.0B in debt securities in the quarter and established or renewed 15 credit facilities Fitch upgraded GM and GMF to BBB 3

4 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 America % 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 Q 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 4

5 Retail Loan Originations $24.1 $19.4 $3.2 $1.4 $25.4 $20.8 $4.2 $2.2 $26.4 $21.8 $0.5 $0.6 $0.6 $0.7 $0.6 $0.6 $0.6 $0.6 $0.7 $0.7 $0.7 $0.8 $0.9 $0.8 $0.9 Jun-16 Sept-16 Dec-16 Mar-17 Jun-17 GMF as % of GM New U.S. loans <620 36% 30% 29% 45% 48% GMF as % of GM New U.S. loans % 12% 12% 33% 23% $3.9 $1.8 $29.3 $24.4 $5.6 $3.4 $31.1 $26.0 $5.3 $3.1 NA loans originated on new vehicles by GM dealers ($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) Weighted Avg. FICO Score

6 U.S. Retail Loan Origination Mix by Credit Tier Three Months Ended ($M) 1 Jun-17 Jun-16 Amount Percent Amount Percent Prime FICO Score 680 and greater $2, % $1, % Near-prime FICO Score 620 to Sub-prime FICO Score less than 620 1, , Total originations $4, % $2, % 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 6

7 Retail Loan Credit Performance Net Charge-offs 4.0% 3.0% 2.0% 1.0% 2.2% Credit Metrics 2.5% 2.6% 2.3% 1.7% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Delinquency Total Continuing Operations net chargeoffs as an annualized % of avg. retail finance receivables Total Continuing Operations day delinquency Total Continuing Operations 60+ day delinquency North America Recovery Rate 0.0% Jun-16 Sept-16 Dec-16 Mar-17 Jun-17 55% 52% 50% 52% 54% 0.0% June 2017 net charge-off percentage is down compared to June 2016 due to positive impact of credit mix shift to prime Finance receivables with FICO scores <620 comprise 41% of the North America retail loan portfolio at June 30, 2017, compared to 48% at December 31, 2016 and 55% at June 30, 2016 North America recovery rates are expected to be lower for the second half of 2017 due to softer used car prices and normal seasonality 7

8 Lease Originations $28.3 $31.6 $34.3 $37.1 $39.7 $6.5 $0.4 $6.1 $0.3 $5.9 $0.3 $6.3 $0.3 $6.7 $0.5 Other Lease Volume 1 ($B) U.S. Lease Volume ($B) $6.1 $5.8 $5.6 $6.0 $6.2 Total Continuing Operations Lease Portfolio ($B) Jun-16 Sept-16 Dec-16 Mar-17 Jun-17 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 % of operating leases were current with respect to payment status 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 1. Canada and Latin America 8

9 Commercial Lending 1,459 1,356 1,385 1,279 1,305 $9.7 $7.9 $8.5 $1.4 $1.5 $6.6 $1.4 $6.0 $1.3 $1.2 $8.3 $6.5 $7.0 $4.8 $5.3 Latin America Commercial Finance Receivables Outstanding ($B) North America Commercial Finance Receivables Outstanding ($B) Number of Dealers for Continuing Operations Jun-16 Sept-16 Dec-16 Mar-17 Jun-17 Steady growth in number of U.S. dealers and receivables outstanding in the June 2017 quarter U.S. dealers totaled 827 at June 30, 2017, a 25% increase year-over-year Floorplan financing represents more than 91% of commercial portfolio 9

10 China Joint Venture SAIC-GMAC (Quarterly) Jun-17 Mar-17 Jun-16 China JV as a % of SGM 1 Retail Sales % 26.2% 26.1% Retail Originations ($B) 2 $2.2 $1.7 $1.7 Ending Earning Assets ($B) Retail $8.5 $8.3 $7.1 Commercial 3 $3.5 $3.0 $3.1 Net Retail Charge-offs 4 0.1% 0.1% 0.3% GMF Equity Income ($M) $41 $47 $37 Increased year-over-year penetration of SGM retail sales driven by strong subvention campaigns Continued positive credit performance Increased equity income compared to June 2016 quarter primarily due to portfolio growth 1. SAIC General Motors Corporation Limited 2. Includes off-balance sheet contracts originated for third parties 3. Commercial receivables are not netted with dealer deposits, in comparison to GMF U.S. GAAP presentation 4. As an annualized percentage of average retail finance receivables 10

11 Financial Results Earnings Before Taxes from Continuing Operations ($M) $585 $356 $406 $ Three months ended June 30 Six months ended June 30 For the six months ended June 30, 2017: Earnings increased due to loan and lease portfolio growth, partially offset by: (1) lower effective loan yield on higher credit quality assets; (2) increased interest expense due primarily to higher average debt outstanding in support of portfolio growth; (3) increased leased vehicle expense due to the growth of the leased asset portfolio; and (4) incremental operating expenses associated with earning asset growth 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 On track to double 2014 calendar-year earnings of $815M when full captive penetration levels are achieved on a consistent basis 11

12 Solid Balance Sheet Metrics Ending Earning Assets ($B) Total Debt ($B) Liquidity ($B) $58.4 $68.6 $80.5 $54.9 $64.6 $78.5 $13.7 $12.2 $17.0 Jun-16 Dec-16 Jun-17 Jun-16 Dec-16 Jun-17 Jun-16 Dec-16 Jun-17 Retail Loan Retail Lease Commercial Loan Secured Debt Unsecured Debt Borrowing Capacity Cash Composition of earning assets continuing to shift to more prime-like credit profile Sub-prime loan portfolio (<620 FICO) represented approximately 13% of ending earning assets at June 30, 2017, down from 15% at December 31, 2016 and 18% at June 30, 2016 Total debt increased commensurate with earning asset growth and the percent of unsecured debt was 51% at June 30, 2017, up from 46% at June 30, 2016 Liquidity increased at June 30, 2017 from December 31, 2016 due to an increase in cash and unencumbered assets eligible to be pledged resulting from issuance of unsecured debt 12

13 Balance Sheet Metrics (cont.) Tangible Net Worth ($B) 1 $7.3 $7.5 $ x Leverage Ratio 1,2, x 11.48x Jun-16 Dec-16 Jun-17 Jun-16 Dec-16 Jun-17 Tangible net worth is net of accumulated losses on foreign currency translation Accumulated other comprehensive loss related to FX of $1.1B at June 30, 2017 June 2017 leverage ratio increase driven by earning asset expansion in higher credit quality tiers and impacted by the partial recognition of the disposal loss associated with the sale of our European Operations At June 30, 2017, the applicable Support Agreement leverage ratio was 11.50x 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, June 30, 2016 and December 31, 2016 ratios as originally reported 13

14 Funding Activity $78.5B Debt Outstanding Credit Facilities 9% Securitization 38% Senior Notes 46% North America $73.2B Credit facilities Committed credit facilities totaling $25.0B provided by 27 banks Additionally, $2.3B drawn on uncommitted credit facilities Capital markets Public securitization funding in the quarter totaled $3.5B Inaugural GMCAR (U.S. Prime Retail Loan) for $1.0B AMCAR (U.S. Sub-prime Loan) for $1.3B GMALT (U.S. Lease) for $1.2B Subsequent to quarter-end, GMCAR for $1.0B Senior unsecured note issuances in the quarter totaled $7.5B $6.0B in the U.S. 1.0B ($1.1B) off EMTN shelf to fund U.S. operations C$400M ($296M) in Canada Inaugural MXN 2.0B ($111M) 2-year floating rate Mexican Medium Term Note Other Private amortizing securitizations Closed three U.S. transactions, supporting the lease and prime loan platforms, totaling $1.75B during the quarter Total 7% Latin America $5.3B At June 0.36% 30,

15 Public Debt Issuances $23-27B $19.4B $10.3 $9.1 $16.5B $10.0 $6.5 ~$11-13 ~$12-14 CY 2016 H CY 2017 Forecast Securitization 1 Senior Notes Maintain strategy of funding locally, with flexibility to issue globally to support U.S. funding needs and enhance investor diversification Securitization platforms segregated by asset type and geography AMCAR - U.S. sub-prime retail loan GCOLT - Canada lease GMALT - U.S. lease GMCAR - U.S. prime retail loan GFORT - U.S. floorplan Global senior notes platform funding operations in U.S., Canada and Mexico (6-8 issuances per year) Will continue to be regular issuer off EMTN shelf post-sale of European Operations to support U.S. funding needs Total issuance in 2017 will increase with the launch of the GMCAR securitization program; cadence across all platforms expected to be similar to Includes 144a transactions 15

16 Appendix 16

17 Discontinued Operations Reconciliation ($M) Three Months Ended June 30, 2017 Twelve Months Ended December 31, 2016 Results of Operations Total revenue $143 $575 Total expenses (102) (424) Income from Discontinued Operations before income taxes $41 $151 One-time Charges Disposal loss (336) -- Income tax benefit (provision) 87 (33) (Loss) income from discontinued operations, net of tax $(208) $118 Assets and Liabilities Held for Sale June 30, 2017 December 31, 2016 Total assets $11,689 $10,951 Total liabilities $10,472 $9,693 The disposal loss represents a portion of the total expected disposal loss associated with the transaction; the remainder will be recognized at closing 17 A1

18 Investor Relations contact: Stephen Jones Vice President, Investor Relations (817) For more information, visit gmfinancial.com