Investor Presentation September 2014 2015 ACURA TLX
2 Caution with Respect to Forward-Looking Statements: These slides may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Certain such forwardlooking statements can be identified by the use of forward-looking terminology such as believes, expects, may, will, should, seeks, scheduled, or anticipates or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. Such forward-looking statements are necessarily dependent on assumptions, data, or methods that may be incorrect or imprecise and that may be incapable of being realized. Factors such as declines in the financial condition or performance of Honda or AHFC or the sales of Honda or Acura products, changes in general business and economic conditions, and fluctuations in interest rates and currency exchange rates, among others, could cause actual results and other matters to differ materially from those in such forward-looking statements. Accounting Standards: Our consolidated financial information is prepared in conformity with U.S. generally accepted accounting principles. This information is presented as of September 18, 2014 and does not purport to be accurate as of any other date. We undertake no obligation to update this information. This presentation does not constitute an offer to sell or a solicitation of an offer to purchase any securities. Any offer or sale of securities will be made only by means of an offering memorandum and related documents.
Honda Corporate Structure Honda Motor Co., Ltd. Honda Keep Well Highlights Maintain 80% ownership 100% American Honda Motor Co., Inc. AHM 100% American Honda Finance Corporation AHFC Support Agreement Ensure AHFC maintains a positive net worth If necessary, provide liquidity for AHFC to meet our obligations 3
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AHFC Operations 5
Business Highlights Total receivable increase 3.6 bil over prior year Underwriting remains consistent Premier customer service Low charge-offs continue Strong residual values continue Strong credit ratings 6
AHFC Income Before Income Taxes Income Before Income Taxes Total Finance Revenues US$ (millions) 2,000 5,637 5,760 5,986 1,800 1,600 1,400 1,200 1,990 1,000 1,652 800 1,445 600 400 200 0 316 FY12 FY13 FY14 3mo Ending Jun 13 1,466 1,550 453 3mo Ending Jun 14 6,000 5,000 4,000 3,000 2,000 1,000 0 7
AHFC Income Before Income Taxes Excludes valuation adjustments and reclassifications US$ (millions) 2,000 1,600 1,200 800 1,811 1,706 1,551 400 0 FY12 FY13 FY14 3mo Ending Jun 13 399 422 3mo Ending Jun 14 8
AHFC Portfolio Mix US$ (millions) 70,000 $62,930 $63,992 60,000 $55,561 $58,852 50,000 40,000 30,000 20,000 10,000 0 FY12 FY13 FY14 Jun 14 Retail $24,359 $24,356 $26,430 $26,981 Lease $21,134 $22,706 $23,952 $25,013 Dealer $3,249 $4,208 $4,371 $4,123 Securitized Assets $6,819 $7,582 $8,177 $7,875 Debt $40,567 $42,149 $45,634 $46,076 As of June 30, 2014: Retail Loans are approx. 54% of outstanding receivables (including ABS assets) Leases are 39% of outstanding receivables Securitized Assets are Retail Loans. We do not currently securitize other asset classes. Dealer Loans Flooring 30% of the Honda/Acura Auto dealers Flooring 97% of the Honda Motorcycle dealers Lease includes both direct finance leases and operating leases. Retail excludes securitized assets 9
AHFC CFS Originations, Penetration & Outstanding Unit (thousands) 3,000 2,500 2,000 1,500 1,000 500 71% 1,118 63% 43% 43% 1,176 New Auto Motorcycle 71% 71% 39% 1,361 Penetration 369 351 66% 37% 36% 80% 70% 60% 50% 40% 30% 20% 10% Penetration FY12, FY14 and the period ending June 2013 show higher new auto penetration as a result of higher incentive programs sponsored by our parent, American Honda Motor Co., Inc. 0 FY12 FY13 FY14 3mo Ending Jun 13 3mo Ending Jun 14 0% Originations Retail Auto Lease Auto Other Outstanding 3,440 3,491 3,660 3,523 3,713 10
AHFC Performance Data AHFC s underwriting standards are reflected in our low charge-off and delinquency numbers. Fiscal Year Ending 3 mo Ending FY12 FY13 FY14 Jun 13 Jun 14 Delinquency (60 or more days) (1),(3) 0.10% 0.10% 0.10% 0.14% 0.13% Allowance for Credit Losses (1),(3) 0.42% 0.23% 0.24% 0.24% 0.23% Charge-Offs (Net of Recoveries) (2),(3),(4) 0.30% 0.28% 0.27% 0.18% 0.18% (1) Percentages based on ending receivable balances for respective periods. (2) Percentages based on average receivable balances for respective periods. (3) Ending and average receivable balances exclude the allowance for credit losses, write-down of lease residual values, unearned subvention income related to our incentive financing programs and deferred origination costs. Average receivable balances are calculated based on the average of each month s ending receivables balance for that fiscal period. (4) Percentages for the three months ended June 30, 2013 and 2014 have been annualized. 11
AHFC Funding Strategy Conservative approach to markets Access to various domestic and international markets Recognize windows of opportunity Maintain prudent maturity profile 12
AHFC s Inaugural SEC registered Debt Sept. 5,2013 Shelf Registration (S-3) Sept. 25, 2013 MTN Program Active Oct. 3, 2013 Inaugural Transaction Inaugural transaction details $ 750 mil 3 year Floater $1.0 bil 3 year Fixed $1.0 bil 5 year Fixed American Honda Finance raised $2.75bn by issuing three-year floaters, three-year fixed and five-year fixed that attracted an order book of slightly over $9bn. This was the first time the issuer was issuing in the SEC-registered format and investors charged into the different tranches even as the company tightened pricing from IPT levels. The three-year fixed tranche saw most of the demand, followed by the five-year fixed and three-year floater. IFR Markets Reuters Investor Comments Appreciate transparency a public program offers SEC registration is helpful especially being index eligible Registered programs offer ability to allocate to many more of our funds Will buy bigger/larger orders of a transaction with registered programs Source: Honda 13
AHFC Funding Flexibility US$ (millions) 50,000 45,000 40,000 35,000 30,000 $40,567 17% 4% 14% $42,149 18% 4% 8% $45,634 $46,076 18% 17% 3% 3% 8% 7% Diversified AHFC Funding Programs - Commercial Paper Program US $7 billion, CAD $2 billion (HCFI) (supported by US $7 billion and CAD $1.6 billion (HCFI) Bank Credit Facilities) - Related Party Debt - Bank Loans 25,000 20,000 28% 32% 36% 34% - US $16 billion Shelf USMTN Public Program 15,000 10,000 5,000 0 14% 17% 16% 14% 11% 12% 11% 10% 9% 11% 9% 13% FY12 FY13 FY14 Jun 14 - US $25 billion USMTN Private 144a Program (Inactive) - US $11 billion EMTN Program (Inactive) - Private Placement Issuance (HCFI) Commercial Paper Related Party Debt Bank Loan US MTN Euro MTN Other ABS - Public & Private Securitization (AHFC & HCFI) 14
FY14 & FYTD15 Debt Issuance US$ (millions) 7,000 6,000 Funding Activities (US Operations Only) $5,750 5,000 4,000 3,000 $3,750 $3,000 2,000 1,000 0 $1,000 $1,161 $800 $1,000 USMTN (Public) USMTN (Private) EMTN Bank Loan Securitization FY14 3 mo Ending FYTD Jun 14 15
Euro MTN by Currency As of June 30, 2014 EMTN by Currency 28% 11% 61% EURO JPY USD Excludes unamortized discount and fees 16
Term Debt Maturity Profile US$ (millions) 14,000 As of June 30, 2014 12,000 34% 10,000 8,000 24% 21% 6,000 14% 4,000 2,000 7% 0 <1yr 1yr - 2yr 2yr - 3yr 3yr - 4yr >4yr Excludes Commercial Paper and Related Party Debt Does not include unamortized discounts and fees Foreign debt based on exchange rates as of June 30, 2014 Repayment schedule of secured debt reflects payment performance assumptions on underlying receivables 17
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