first quarter 2018 earnings presentation · commercial3 $3.7 $3.2 $3.0 net retail charge-offs4...

FIRST QUARTER 2018EARNINGS

PRESENTATIONApril 26, 2018

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This presentation contains several “forward-looking statements.” Forward-looking statements are those that use wordssuch as “believe,” “expect,” “intend,” “plan,” “may,” “likely,” “should,” “estimate,” “continue,” “future” or "anticipate" andother comparable expressions. These words indicate future events and trends. Forward-looking statements are ourcurrent views with respect to future events and financial performance. These forward-looking statements are subject tomany assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results orfrom those anticipated by us. The most significant risks are detailed from time to time in our filings and reports with theSecurities and Exchange Commission, including our annual report on Form 10-K for the year ended December 31, 2017.Such risks include - but are not limited to - GM’s ability to sell new vehicles that we finance in the markets we serve; theviability 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; thelevel of net charge-offs, delinquencies and prepayments on the loans and leases we originate; the effect, interpretationor application of new or existing laws, regulations, court decisions and accounting pronouncements; the prices at whichused cars are sold in the wholesale auction markets; vehicle return rates and the residual value performance on vehicleswe 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 andbusiness conditions; competition; our ability to manage risks related to security breaches and other disruptions to ournetworks 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 assumptionsprove incorrect, our actual results may vary materially from those expected, estimated or projected. It is advisable not toplace undue reliance on any forward-looking statements. We undertake no obligation to, and do not, publicly update orrevise any forward-looking statements, except as required by federal securities laws, whether as a result of newinformation, future events or otherwise.

Unless otherwise noted, prior period information excludes Discontinued Operations and reflects results for North America(NA), Latin America (LA) and China.

SAFE HARBOR STATEMENT

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FIRST QUARTER OPERATING HIGHLIGHTS

($M)March 2018

QuarterMarch 2017

QuarterEarnings Before Tax $443 $229

Total Originations (Loan & Lease) $10,790 $11,880

Ending Earning Assets $88,129 $74,870

Net Charge-offs as an Annualized % of Avg. Retail Finance Receivables 2.1% 2.3%

• Operating results– Strong quarterly earnings, up significantly year-over-year– U.S. retail loan originations in the quarter totaled $4.1B, with 81% attributable to prime and near-prime

loans (FICO >620) compared to 76% in the March 2017 quarter– Stable credit performance benefiting from continued mix shift to prime credit quality assets in the U.S.– U.S. disposition proceeds on leased vehicles returned in the quarter compared to estimates at

origination have been stable since the March 2017 quarter – Realized strong earnings in Latin America driven by portfolio growth resulting from increased

penetration of GM retail sales

• Funding platform– Issued $8.1B in public and private debt securities in the quarter, and renewed 6 credit facilities

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• U.S. retail penetration grew sequentially due to down payment assistance programsbeing offered on a greater number of high-volume vehicles– Retail penetration was down year-over-year due to lower GM lease penetration and down payment

assistance being offered by GM on fewer vehicles, with a smaller incentive spend per vehicle

• Latin America penetration of GM retail sales was up due to continued strong jointcampaign activity with GM

Quarter Ended

Mar-18 Dec-17 Mar-17

GMF as a % of GM Retail SalesU.S. 40.6% 30.4% 50.4%Latin America 66.7% 55.7% 60.5%

GMF Wholesale Dealer PenetrationU.S. 21.6% 20.2% 16.9%Latin America 98.2% 97.3% 97.0%

GM as % of GMF Retail Originations(GM New / GMF Retail Loan and Lease)

U.S. 89.1% 89.2% 86.9%Latin America 93.5% 93.9% 94.2%

GM AND GMF PENETRATION STATISTICS

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Mar-17 Jun-17 Sept-17 Dec-17 Mar-18

$0.8 $0.9 $1.0 $1.0 $0.9$0.7 $0.7 $0.5 $0.5 $0.5$0.7 $0.6 $0.6 $0.5 $0.6

$3.4

$5.6

$3.1

$5.3

$2.6

$4.7

$2.4

$4.4

$3.1

$5.1

$24.4 $26.0 $27.0 $27.6 $28.8$29.3$31.1 $32.3 $32.8 $34.3

U.S. Metrics:

GMF as % of GM Newloans ≥620 33% 23% 18% 14% 29%

GMF as % of GM Newloans <620 45% 48% 40% 34% 36%

Weighted Avg. FICOScore 703 698 696 702 716

North America GM New1

North America Non-GM3

North America GM Used2

Total Retail Finance Receivables

Latin America

North America RetailFinance Receivables

RETAIL LOAN ORIGINATIONS

1. Loans originated on new vehicles by GM dealers2. Loans originated on used vehicles by GM dealers3. Loans originated on vehicles by non-GM dealers

($B)

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5.0%

4.0%

3.0%

2.0%

1.0%

0.0%Mar-17 Jun-17 Sept-17 Dec-17 Mar-18

2.3%

1.7%1.9%

2.2% 2.1%

North AmericaRecovery Rate 52% 54% 52% 50% 53%

• March 2018 net charge-off percentage is down compared to March 2017 due topositive impact of credit mix shift to prime, as well as better recovery rates– Finance receivables with FICO scores <620 comprise 35% of the North America retail loan portfolio at March

31, 2018, compared to 43% at March 31, 2017– North America recovery rates were better in the March 2018 quarter compared to the March 2017 period;

however, they are expected to trend down on a year-over-year basis for the remainder of the year– Delinquency continues to be positively impacted by the credit mix shift; however, delinquency at March 31,

2018 was elevated due to operational constraints resulting from the conversion of our loan servicing systemat the beginning of calendar 2018

Net charge-offs1

31-60 day delinquency

61+ day delinquency

RETAIL LOAN CREDIT PERFORMANCE

1. As an annualized percentage of average retail finance receivables

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• U.S. lease portfolio at March 31, 2018:– 1.6 million contracts with a balance of $41.0B– 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

• Experienced stronger than anticipated used car prices in the quarter; however,increasing off-lease supply is expected continue to pressure prices and thereforeexpect a decline in 2018 of 5-6% in the U.S. as compared to 2017

U.S. Lease Volume Other Lease Volume Total Lease Portfolio


$6.0 $6.2 $6.1 $5.5 $5.3

$0.3$6.3 $0.5

$6.7$0.4$6.5

$0.3$5.8

$0.4$5.7

$37.1$39.7

$41.8 $42.9 $43.4

Other Lease Volume1

LEASE ORIGINATIONS ($B)

1. Canada and Latin America

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• Steady growth in number of U.S. dealers and receivables outstanding– U.S. dealers totaled 971 at March 31, 2018, a 26% increase year-over-year

• Floorplan financing represents more than 90% of commercial portfolio


$7.0$8.3 $8.1 $8.7 $8.9

$1.5$8.5 $1.4

$9.7

$1.4$9.5

$1.6

$10.3$1.5

$10.41,385

1,459 1,502 1,5381,592

Number of DealersNorth America Commercial FinanceReceivables Outstanding ($B)

Latin America Commercial FinanceReceivables Outstanding ($B)

COMMERCIAL LENDING

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Quarter Ended


China JV as a % of SGM1 Retail Sales2 36.3% 45.1% 26.2%Retail Originations ($B)2 $3.0 $4.3 $1.7

Ending Earning Assets ($B)Retail $11.7 $11.0 $8.3Commercial3 $3.7 $3.2 $3.0

Net Retail Charge-offs4 0.05% 0.05% 0.14%

GMF Equity Income ($M) $52 $44 $47

• Strong year-over-year results– Increased penetration of SGM retail sales and total retail originations

• Driven by continued increase in acceptance of consumer financing and joint marketing campaignswith the OEM

– Continued strong credit dynamics, with net retail charge-offs of just 5 bps– Grew equity income both sequentially and year-over-year

SAIC-GMAC CHINA JOINT VENTURE

1. SAIC General Motors Corporation Limited2. Includes off-balance sheet contracts originated for third parties3. Commercial receivables are not netted with dealer deposits, in comparison to GMF U.S. GAAP presentation of $2.9B, $2.5B and $2.4B

at March 31, 2018, December 31, 2017 and March 31, 2017, respectively4. As an annualized percentage of average retail finance receivables

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North America International

Earnings Before Taxes ($M)Quarter Ended March 31

2018 2017

$443

$229

• Year-over-year earnings increased due to overall portfolio growth and stable credit andresidual performance– Effective yield on retail finance receivables decreased to 9.0% from 9.8% due primarily to increased lending

to borrowers with prime credit– Provision expense as an annualized percentage of average retail finance receivables was down year-over-

year to 1.6% from 3.1% due primarily to a decrease in the loss confirmation period, resulting from the shift inthe credit mix of the portfolio to a larger percentage of prime loans

– Operating expenses increased from $330M to $365M in the March 2018 quarter relating to growth in earningassets and investments to support origination and servicing capabilities in the U.S.

• Operating expenses as an annualized percentage of average earning assets decreased to 1.7% from1.9% due to efficiency gains achieved through higher earning asset levels

• Expect calendar year 2018 pre-tax earnings to exceed 2017 with the continued expansionof retail and commercial penetration in North America and overall portfolio growth

FINANCIAL RESULTS

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Total Debt ($B)


$70.5$80.7 $83.5

• Composition of ending earning assets has shifted to more prime credit profile– Sub-prime loan portfolio (FICO <620) represented approximately 12% of ending earning assets at

March 31, 2018, down from 15% at March 31, 2017• Total debt increased commensurate with earning asset growth and the percentage

of unsecured debt was 53% at March 31, 2018, up from 46% at March 31, 2017• Liquidity at March 31, 2018 was up $1.5B from December 31, 2017 due primarily to

an increase in receivables eligible to be pledged and a decrease in advancesoutstanding on secured revolving credit facilities

RetailLease

RetailLoan

CommercialLoan

UnsecuredDebt

SecuredDebt

Ending Earning Assets ($B)


$74.9$86.0 $88.1

Liquidity ($B)


$10.9

$17.9 $19.4

CashBorrowing Capacity

SOLID BALANCE SHEET

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$7.8$9.1 $9.6


• Increase in tangible net worth and decrease in leverage ratio attributable tocontinued earnings growth

– At March 31, 2018, the applicable Support Agreement leverage ratio threshold was 11.50x

Leverage Ratio1,2Tangible Net Worth ($B)

10.85x

9.49x

SOLID BALANCE SHEET (CONTINUED)

1. Calculated consistent with GM/GMF Support Agreement, filed on Form 8-K with the Securities and Exchange Commission on September 4, 20142. March 31, 2017 ratio as originally reported

9.10x

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FUNDING ACTIVITY

Debt Outstandingat March 31, 2018

$83.5B

North America Unsecured Debt

48%

Latin America7%

North AmericaCredit Facilities

2%

North America Securitization

43%

• Credit facilities – Committed credit facilities totaling $26.1B provided by 27 banks

• Additionally, $2.4B drawn on uncommitted credit facilities• Capital markets

– Public securitization funding in the quarter totaled $3.2B• GMCAR 2018-1 (U.S. Prime Retail Loan), $1.2B• GMALT 2018-1 (U.S. Lease), $1.25B• GFORT 2018-1 and 2018-2 (U.S. Floorplan), $772M• Subsequent to quarter-end, GMCAR 2018-2, $1.2B

– Senior unsecured note issuances in the quarter totaled $3.4B• $1.65B in the U.S.; C$500M ($390M) in Canada; €1.1B

($1.4B) in Europe• Subsequent to quarter-end, issued $2.5B in the U.S.

• Private amortizing securitizations– Closed three U.S. transactions, supporting the lease and prime

loan platforms, totaling $1.5B in the quarter

• Other– In April, GM and GMF amended the support agreement, giving

GMF exclusive access to the $2.0B, 364-day tranche of GM'sRevolving Credit Facility

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Securitization1 Unsecured

CY 2017 Q1 2018 CY 2018 Forecast

$14.0

$3.2

$12.7

$26.7B

$3.4$6.6B

• Maintain strategy of funding locally, with flexibility to issue globally to support U.S. fundingneeds and enhance investor diversification

• Securitization platforms segregated by asset type and geography– AMCAR - U.S. Sub-prime Retail Loan– GMALT - U.S. Lease– GFORT - U.S. Floorplan

• Global senior notes platform funding operations in U.S., Canada and Latin America (6-8issuances per year)– Will continue to be regular issuer off EMTN shelf to support U.S. funding needs– Unsecured issuance in 2018 forecast to be lower than 2017 due to limited refinancing activity

$20-24B

~$7-9

~$13-15

1.65 USD Unsecured1.23 GMCAR 2018-11.35 EUR Unsecured0.39 CAD Unsecured1.25 GMALT 2018-10.77 GFORT 2018-1 and 20.04 Term Notes6.68 Q1 2017

6.68 YTD Q2

6.68 YTD Q3

6.68 CY 2017

Securitization1

PUBLIC DEBT ISSUANCES

1. Includes 144a transactions

– GCOLT - Canada Lease– GMCAR - U.S. Prime Retail Loan

For more information, visit gmfinancial.com

Investor Relations contact:Stephen Jones

Vice President, Investor Relations(817) 302-7119

[email protected]

first quarter 2018 earnings presentation · commercial3 $3.7 $3.2 $3.0 net retail charge-offs4...

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