4 th Quarter 2017 Earnings Presentation. February 6, 2018

Transcription

1 4 th Quarter 2017 Earnings Presentation February 6, 2018

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 fluctuations 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; and changes in business strategy, including expansion of product lines and credit risk appetite, acquisitions and divestitures. 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 (NA), Latin America (LA) and China. 2

3 4 th Quarter Operating Highlights December 2017 December 2016 ($M) Quarter Quarter Earnings Before Tax from Continuing Operations $301 $162 Total Originations (Loan & Lease) $10,214 $9,782 Ending Earning Assets $85,996 $68,622 Net Charge-offs as an Annualized % of Avg. Retail Finance Receivables 2.2% 2.6% Operating results Grew U.S. retail loan originations in the quarter to $3.4B, an increase of $0.4B year-over-year concentrated in prime lending Mix shift to prime credit quality assets in the U.S. continues to drive year-over-year credit performance improvement U.S. disposition proceeds on leased vehicles returned in the quarter compared to estimates at origination were up year-over-year and stable sequentially During 2017 used car prices in the U.S. declined approximately 5% compared to 2016 Expect used car prices in the U.S. to decline an additional 5-6% in 2018 due to increasing supply of used vehicles driven by volume of off-lease returns Equity income for the China Joint Venture was $173M for calendar year 2017, up 15% from 2016 Funding platform expansion Issued $5.6B in public and private debt securities in the quarter, and established or renewed 14 credit facilities Completed the sale of European Operations 3

4 GM and GMF Penetration Statistics Quarter Ended CY 2017 CY 2016 Dec-17 Sept-17 Dec-16 GMF as a % of GM Retail Sales U.S. 39.2% 33.8% 30.4% 35.6% 32.2% Latin America % 54.0% 55.7% 57.4% 51.4% GMF Wholesale Dealer Penetration U.S. 20.2% 15.9% 20.2% 19.4% 15.9% Latin America 96.5% 96.2% 97.3% 96.0% 97.2% GM as % of GMF Retail Originations (GM New / GMF Retail Loan and Lease) U.S. 88.1% 87.3% 89.2% 88.5% 86.3% Latin America 94.2% 95.5% 93.9% 93.9% 94.9% In the U.S., calendar year increase in GM retail sales penetration driven by lease share and strong down payment assistance and subvention programs in the first half of 2017; second half impacted by lower lease share and type of incentive programs offered In Latin America, GM retail sales penetration up year-over-year for the quarter and calendar year due to continued strong joint campaign activity with GM GMF wholesale dealer penetration in the U.S. continues to increase with success of refreshed Dealer Dividends program, achieving the 20% market share milestone 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 $26.4 $21.8 $3.9 $1.8 $29.3 $24.4 $5.6 $3.4 $31.1 $26.0 $5.3 $3.1 $32.3 $32.8 $27.0 $27.6 $4.7 $4.4 $2.6 $2.4 NA loans originated on new vehicles by GM dealers ($B) NA loans originated on used vehicles by GM dealers ($B) NA loans originated on vehicles by non-gm dealers ($B) U.S. Metrics: $0.6 $0.7 $0.6 $0.6 $0.5 $0.6 $0.7 $0.7 $0.5 $0.5 $0.9 $0.8 $0.9 $1.0 $1.0 Dec-16 Mar-17 Jun-17 Sept-17 Dec-17 GMF as % of GM New loans % 33% 23% 18% 14% LA loans originated ($B) Total retail finance receivables portfolio, net of fees ($B) NA retail finance receivables portfolio, net of fees ($B) GMF as % of GM New loans <620 29% 45% 48% 40% 34% Weighted Avg. FICO Score

6 Retail Loan Credit Performance Credit Metrics Net Charge-offs 4.0% 3.0% 2.0% 1.0% 2.6% 2.3% 1.7% 1.9% 2.2% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Delinquency Net charge-offs as an annualized % of avg. retail finance receivables day delinquency 61+ day delinquency North America Recovery Rate 0.0% Dec-16 Mar-17 Jun-17 Sept-17 Dec-17 50% 52% 54% 52% 50% 0.0% December 2017 net charge-off percentage is down compared to December 2016 due to positive impact of credit mix shift to prime Finance receivables with FICO scores <620 comprise 37% of the North America retail loan portfolio at December 31, 2017, compared to 48% at December 31, 2016 North America recovery rates are expected to trend down year-over-year in

7 Lease Originations $34.3 $37.1 $39.7 $41.8 $42.9 $5.9 $0.3 $6.3 $0.3 $6.7 $0.5 $6.5 $0.4 $5.8 $0.3 Other Lease Volume 1 ($B) U.S. Lease Volume ($B) $5.6 $6.0 $6.2 $6.1 $5.5 Lease Portfolio ($B) Dec-16 Mar-17 Jun-17 Sept-17 Dec-17 U.S. lease portfolio at December 31, 2017: 1.5 million contracts with a balance of $40.4B 95% of lease portfolio had a FICO score or equivalent greater than 620 at origination 99% of operating leases were current with respect to payment status 1. Canada and Latin America 7

8 Commercial Lending 1,356 $7.9 $1.4 1,459 1,385 $9.7 $8.5 $1.4 $1.5 1,502 $9.5 $1.4 1,538 $10.3 $1.6 Latin America Commercial Finance Receivables Outstanding ($B) North America Commercial Finance Receivables Outstanding ($B) Number of Dealers $6.5 $7.0 $8.3 $8.1 $8.7 Dec-16 Mar-17 Jun-17 Sept-17 Dec-17 Steady growth in number of U.S. dealers and receivables outstanding U.S. dealers totaled 912 at December 31, 2017, a 25% increase year-over-year Floorplan financing represents more than 90% of commercial portfolio 8

9 China Joint Venture SAIC-GMAC Quarter Ended CY 2017 CY 2016 Dec-17 Sept-17 Dec-16 China JV as a % of SGM 1 Retail Sales % 29.3% 45.1% 40.2% 36.3% Retail Originations ($B) 2 $11.2 $8.3 $4.3 $3.0 $3.0 Ending Earning Assets ($B) Retail $11.0 $8.5 $11.0 $9.4 $8.5 Commercial 3 $3.2 $2.6 $3.2 $3.3 $2.6 Net Retail Charge-offs 4 0.1% 0.3% 0.1% 0.1% 0.2% GMF Equity Income ($M) $173 $151 $44 $41 $42 Increased year-over-year penetration of SGM retail sales driven by subvention campaigns Continued strong credit performance Increased equity income in the quarter driven by strong 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 of $2.5B, $2.6B and $2.0B at December 31, 2017, September 30, 2017 and December 31, 2016, respectively 4. As an annualized percentage of average retail finance receivables 9

10 Financial Results Earnings Before Taxes from Continuing Operations ($M) $1,196 $762 $301 $ Three months ended December 31 Year ended December 31 Calendar year 2017 earnings exceeded 2016 with overall portfolio growth from the continued expansion of retail and commercial penetration in North America offsetting the impact of weaker residual performance Given similar dynamics, expect calendar year 2018 pre-tax earnings to exceed 2017 On track to double 2014 calendar year earnings of $0.8B when full captive penetration levels are achieved on a consistent basis 10

11 Solid Balance Sheet Metrics Ending Earning Assets ($B) Total Debt ($B) Liquidity ($B) $68.6 $83.6 $86.0 $64.6 $79.0 $80.7 $17.8 $17.9 $12.2 Dec-16 Sept-17 Dec-17 Dec-16 Sept-17 Dec-17 Dec-16 Sept-17 Dec-17 Retail Loan Retail Lease Commercial Loan Secured Debt Unsecured Debt Borrowing Capacity Cash Composition of ending earning assets continued to shift to more prime-like credit profile Sub-prime loan portfolio (<620 FICO) represented approximately 12% of ending earning assets at December 31, 2017, down from 15% at December 31, 2016 Total debt increased commensurate with earning asset growth and the percentage of unsecured debt was 51% at December 31, 2017, up from 46% at December 31, 2016 Liquidity increased at December 31, 2017 from December 31, 2016 due to increased cash and additional borrowing capacity on secured credit facilities, resulting from issuances of secured and unsecured debt and preferred stock 11

12 Balance Sheet Metrics (cont.) Tangible Net Worth ($B) Leverage Ratio 1,2 $7.5 $9.3 $ x 10.23x 9.49x Dec-16 Sept-17 Dec-17 Dec-16 Sept-17 Dec-17 Tangible net worth is net of accumulated losses on foreign currency translation Accumulated other comprehensive loss related to FX of $0.8B at December 31, 2017 Year-over-year leverage ratio decrease is primarily attributable to the issuance of preferred stock, tax reform benefits and continued earnings growth At December 31, 2017, the applicable Support Agreement leverage ratio threshold was 11.50x Tax reform provided a $240M benefit due to remeasurement of deferred tax liabilities at a lower rate 1. Calculated consistent with GM/GMF Support Agreement, filed on Form 8-K with the Securities and Exchange Commission on September 4, December 31, 2016 ratio as originally reported 12

13 Funding Activity $80.7B Debt Outstanding Credit Facilities 4% Securitization 43% Unsecured 46% North America $74.7B Credit facilities Committed credit facilities totaling $26.0B provided by 25 banks Additionally, $2.5B drawn on uncommitted credit facilities Capital markets Public securitization funding in the quarter totaled $2.6B AMCAR (U.S. Sub-prime Retail Loan), $1.3B GMCAR (U.S. Prime Retail Loan), $1.0B GCOLT (Canada Lease), C$350M ($272M) Subsequent to year-end, GMCAR , $1.2B Senior unsecured note issuances in the quarter totaled $2.0B (in the U.S.) Subsequent to year-end, issued $1.65B in the U.S. Other Private amortizing securitizations Closed two U.S. transactions, supporting the prime loan platform, totaling $1.0B in the quarter Total 7% Latin America $6.0B At December 0.33% 31,

14 Public Debt Issuances $26.7B $19.4B $10.3 $12.7 $21-24B ~$7-9 $9.1 $14.0 ~$14-15 CY 2016 CY 2017 CY 2018 Forecast Securitization1 1 Unsecured 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 Latin America (6-8 issuances per year) Will continue to be regular issuer off EMTN shelf to support U.S. funding needs Unsecured issuance in 2018 expected to be lower than 2017 due to limited refinancing activity 1. Includes 144a transactions 14

15 Highlights/Accomplishments In 2017, GM Financial: Earned $1.2B in pre-tax income from continuing operations Grew full-year penetration of GM retail sales in the U.S. and Latin America Continued favorable balance sheet trends, with a lower leverage ratio, and an increasing mix of prime earning assets and unencumbered assets Issued $35.1B in public and private, secured and unsecured debt globally Realized another year-over-year increase in China JV equity income, driven by market growth, increased retail penetration and strong credit performance 15

16 Appendix 16

17 Discontinued Operations Reconciliation Years Ended ($M) Three Months Ended Dec 31, 2017 Dec 31, 2017 Dec 31, 2016 Results of Operations Total revenue $52 $474 $574 Total expenses Income from Discontinued Operations before income taxes One-time Charges Disposal loss (151) (525) -- Income tax provision (Loss) income from discontinued operations, net of tax $(255) $(424) $97 Assets and Liabilities Held for Sale Dec 31, 2016 Total assets $10,951 Total liabilities $9,693 The total disposal loss recognized was $525M, including $197M related to the recognition of foreign currency translation losses 17 A1

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