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| 8-K - 8-K - General Motors Financial Company, Inc. | q120178-kinvestorpresentat.htm |
Strategic and Operational
Overview
April 28, 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 in
North America, Latin America, China and Europe, particularly the United Kingdom where automobile sales may be
negatively impacted due to the passage of the referendum to discontinue its membership in the European Union; the
viability of GM-franchised dealers that are commercial loan customers; the availability and cost of sources of financing;
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 and currency exchange rate fluctuations; our financial condition and
liquidity, as well as future cash flows and earnings; changes in general and economic 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 the PSA Group, including satisfaction of closing
conditions. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, actual
events or results may differ materially. 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.
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 $85B, with
operations in more than 20 countries
− Offering auto finance products to
16,000 dealers worldwide
− GM Financial’s global footprint covers
over 85% of GM’s worldwide sales
GM Financial is a strategic business for GM and well positioned for profitable
growth and contribution to overall enterprise value
North American segment
International segment
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 expected to double from 2014 when full captive penetration levels are achieved
5
GM Financial Evolution
Full captive evolution substantially complete; GMF now in captive expansion phase
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
International
Acquisition
U.S. Prime
Loan
Launch
Commercial
Lease
Launch
GM Lease
Exclusivity
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 NA
Strategically grow
NA floorplan
Expand Customer
Relationship
Management
Maintain IO’s
dominant GM share
6
GM/PSA Transaction – GMF Summary
PSA with bank partner BNP to acquire GM Financial European operations
Consideration
Profitability
Leverage Ratio
Funding Profile
Asset Mix
Closing
0.8x book value at closing, expected to be ~$1.0B
Minimal impact to profitability as growth driven by U.S. expansion
Majority of funding plan remains unchanged; expected to maintain
similar secured/unsecured funding mix
Temporarily higher mix of lease assets given prime loan
concentration in Europe
Neutral to leverage ratio; GMF to operate within defined Support
Agreement parameters
GMF to retain portion of proceeds and may make special dividend
over time to GM following the completion of the sale
AutoCo transaction expected to close by end of 2017; FinCo upon
or after AutoCo depending on timing of regulatory approval
7
Strong Operating Results
$837 $913
$260
CY-15 CY-16 Mar-17 Qtr
Pre-tax Income ($M)
North America (NA) International (IO)
1.9% 2.0% 1.9%
CY-15 CY-16 Mar-17 Qtr
Net Charge-offs on Loans1
2.7%
2.2% 2.0%
CY-15 CY-16 Mar-17 Qtr
Operating Expense Ratio2
$37.7
$43.4
$12.8
CY-15 CY-16 Mar-17 Qtr
Origination Volume ($B)
NA Retail Loans NA Retail Leases
IO Retail Loans IO Retail Leases
1. As an annualized percentage of average retail finance receivables
2. As an annualized percentage of average earning assets
8
Solid Balance Sheet
Tangible net worth is net of accumulated losses on foreign exchange translation
‒ Accumulated other comprehensive loss related to FX of $1.1B at March 31, 2017
Liquidity in March 2017 quarter impacted by increased credit facility utilization due to asset growth
‒ Liquidity positively impacted subsequent to quarter-end by $3.0B U.S. senior unsecured note issuance in April
Year-over-year leverage increase consistent with earning asset expansion in higher credit quality tiers and
within the applicable level of the Support Agreement
1. Calculated consistent with GM/GMF Support Agreement, filed on Form 8-K with the Securities and Exchange Commission on
September 4, 2014.
$57.7
$78.6
$85.1
Dec-15 Dec-16 Mar-17
Ending Earning Assets ($B)
Retail Loans Commercial Loans Retail Leases
$14.7 $14.2
$12.4
Dec-15 Dec-16 Mar-17
Liquidity ($B)
Borrowing capacity Cash
8.3x
10.4x 10.9x
Dec-15 Dec-16 Mar-17
Leverage Ratio1
$6.9
$7.5 $7.8
Dec-15 Dec-16 Mar-17
Tangible Net Worth ($B)
9
Earning Assets Composition
Earning assets evolving to more
captive-like mix with over 85% of
earning assets related to financing GM
new vehicles
Portfolio shifting to predominantly
higher credit quality assets
− Sub-prime loan portfolio (<620 FICO)
represented less than 15% of ending
earning assets at March 31, 2017
Earning asset expansion in North
America aligns with GM’s geographic
sales footprint
Lease 13%
Lease 13%
$85.1B
At March 31, 2017
Earning assets composition is shifting towards full captive state
Latin America
Commercial
2%
Latin America
Retail 6%
Europe
Commercial
4%
Europe
Retail 8%
North America
Commercial
8%
North America
Lease 43%
North America
Retail 29%
10
AMCAR – U.S. sub-prime retail loan ECARAT U.K. – retail loan
GMALT – U.S. lease ECARAT Germany – retail loan
GFORT – U.S. floorplan GCOLT – Canada lease
GMCAR – U.S. prime retail loan
Funding Platform
Credit facilities
− Totaling $27.4B, provided by 36 banks at March 31, 2017
Global securitization platforms
− Segregated by asset type and geography - current platforms:
− Projected CY 2017 issuances: ~$13-16B, including 144A
transactions
− Private amortizing securitizations are used to augment/diversify
funding
Global senior notes platform
− Supporting operations in U.S., Canada, Europe and Mexico
− Projected CY 2017 issuances: ~$11-14B, 5-8 offerings
Other
− Retail customer deposits in Germany, $1.9B at March 31, 2017
Unsecured debt 47% of total debt at March 31, 2017
At March 31, 2017
$79.9B
Shifting funding mix toward unsecured debt thereby increasing unencumbered assets; strategy
to fund locally with flexibility to issue globally to support U.S. growth
North America
Securitization
35%
North America
Sr Notes 37%
North America
Credit
Facilities 10%
International
Securitization
4%
International
Credit
Facilities 9%
International
Sr Notes 2%
International
Other
Unsecured 3%
11
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
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 March 31, 2017
12
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- Positive BBB- BBB- Positive
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
Investment grade rating critical for captive strategy execution
GM targeting performance consistent with “A” ratings criteria
13
North America
14
GM and GMF Penetration Statistics
Mar-17 Dec-16 Mar-16
GMF as a % of GM Retail Sales
U.S. 50.4% 32.2% 37.5%
Canada 19.2% 18.7% 23.2%
GMF Wholesale Dealer Penetration
U.S. 16.9% 15.9% 13.7%
Canada 12.2% 12.2% 11.8%
GM as % of GMF Retail Originations
(GM New / GMF Retail Loan and Lease)
U.S. 86.9% 86.3% 88.8%
Canada 99.2% 99.3% 99.6%
U.S. penetration of GM retail sales grew in the March 2017 quarter due to down payment
assistance promotions driving increased penetration of standard loan
15
Origination Mix by Credit Tier
Three Months Ended
(Loan and Lease Originations, $M)1 Mar-17 Mar-16
Amount Percent Amount Percent
Prime – FICO Score 680 and greater $8,253 74.5% $6,347 68.3%
Near prime – FICO Score 620 to 679 1,245 11.2% 1,241 13.3%
Sub-prime – FICO Score less than 620 1,579 14.3% 1,712 18.4%
Total loan and lease originations $11,077 100.0% $9,300 100.0%
Origination mix continuing to shift to prime credit tiers, comprising 75% of originations in
March 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
16
Retail Loan Originations
GMF as % of
GM U.S. <620
GMF as a % of
GM U.S. ≥620
Weighted Avg.
FICO
38%
10%
661
36%
10%
659
30%
12%
686
29%
12%
682
GMF is GM’s exclusive subvented loan provider
GM New origination volume in March 2017 quarter up sequentially and year-over-year due
to down payment assistance promotions driving increased penetration of standard loan
45%
33%
703
$0.5 $0.6 $0.6 $0.6 $0.7
$0.5 $0.5 $0.6 $0.6
$0.7
$1.6 $1.4
$2.2 $1.8
$3.4
$18.8 $19.4
$20.8
$21.8
$24.4
Mar-16 Jun-16 Sept-16 Dec-16 Mar-17
Loans originated on new
vehicles by GM dealers
($B)
Loans originated on used
vehicles by GM dealers
($B)
Loans originated on
vehicles by non-GM
dealers ($B)
Retail finance receivables
portfolio, net of fees ($B)
$2.6
$3.4
$2.5
$3.0
$4.8
17
Retail Loan Credit Performance
March 2017 net charge-off percentage is down compared to March 2016 due to
positive impact of credit mix shift to prime, partially offset by credit normalization
and a decline in recovery values
− Finance receivables with FICO scores <620 comprise 43% of the North America retail loan portfolio
at March 31, 2017, compared to 48% at December 31, 2016 and 57% at March 31, 2016
− Recovery rates are expected to trend down year-over-year in 2017
Net charge-offs as
an annualized % of
avg. retail finance
receivables
31-60 day
delinquency
61+ day
delinquency
Recovery
Rate
55% 52% 50% 52% 54%
2.6%
2.3%
2.7% 2.8%
2.3%
0.0%
2.0%
4.0%
6.0%
8.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Mar-16 Jun-16 Sept-16 Dec-16 Mar-17
De
linqu
e
nc
y
N
e
t Cha
rg
e
-o
ff
s
Credit Metrics
18
Lease Portfolio
GMF is GM’s exclusive subvented lease provider
Leasing provides an attractive option to consumers looking to manage their
monthly payment and enhances GM loyalty and retention
Credit performance commensurate with the predominately prime credit portfolio
Origination volume impacted by GM sales attributable to lease
$6.5 $6.1 $5.9 $5.6 $6.0
$0.2
$0.3
$0.2 $0.3
$0.3
$24.4
$28.3
$31.6
$34.3
$37.0
-25
-15
-5
5
15
25
35
Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Canada Lease Volume ($B)
U.S. Lease Volume ($B)
Lease Portfolio ($B)
Lease Originations
19
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
ALG utilized to set residual values
− Residual value set at origination and marked quarterly over the life of the lease based on ALG estimates,
augmented with internal models
− Multiple factors used in predicting future vehicle residual values; including
Macro Factors: Gas Prices, Durable Goods, Consumer Spending
Industry Factors: Industry and Segment Supply, Wholesale Values, Incentives, Fleet Strategy
Brand Factors: Packaging/Pricing, Vehicle Lifecycle, Brand Outlook/Value, Quality Perception
Residual performance on returned vehicles1
‒ U.S. disposition proceeds on returned vehicles
compared to estimates at origination continue to
moderate, particularly in the CUV segment
‒ 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. Vehicles not purchased by the lessee or dealer at contract residual value that are
returned to and remarketed by GMF
2. Reflects average per unit gain/(loss) on vehicles returned to GMF and sold in the period
20
Commercial Lending
Experiencing steady growth in number of dealers and receivables outstanding
At March 31, 2017, floorplan financing represented 90% of commercial portfolio
$4.4
$4.8
$5.3
$6.5
$7.0
694
721
745
792
829
Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Commercial Finance Receivables Outstanding ($B) Number of Dealers
21
International Operations
22
GM and GMF Penetration Statistics
Mar-17 Dec-16 Mar-16
GMF as a % of GM Retail Sales
Europe 36.2% 39.8% 35.9%
Latin America 60.5% 51.4% 53.5%
GMF Wholesale Dealer Penetration
Europe 99.4% 98.9% 99.9%
Latin America 97.0% 97.2% 95.2%
GM as % of GMF Retail Originations
(GM New / GMF Retail Loan and Lease)
Europe 81.6% 80.6% 81.0%
Latin America 94.2% 94.9% 95.3%
Penetration levels relatively stable in Europe; higher in Latin America driven primarily by
Mexico
Note: GMF penetration of GM retail sales for all periods presented was revised to more closely align with GM’s regional definition of retail sales
23
Retail Loan Originations
Stable origination trend, with foreign exchange impacting quarterly volume
− Number of outstanding loan contracts (1.6M) at March 31, 2017 increased by 3%
compared to March 31, 2016
$1.0 $1.0 $0.9 $0.8 $0.9
$0.6 $0.7 $0.8
$0.8
$0.8
$11.5 $11.4 $11.5 $11.1
$11.6
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
Mar-16 Jun-16 Sept-16 Dec-16 Mar-17
Latin America Retail
Loan ($B)
Europe Retail
Loan ($B)
Retail finance
receivables
portfolio, net of fees ($B)
$1.6 $1.7
$1.7 $1.6 $1.7
24
Retail Loan Credit Performance
Credit metrics generally stable, consistent with a predominantly
prime portfolio
Net charge-offs as
an annualized % of
avg. retail finance
receivables
31-60 day
delinquency
61+ day
delinquency 0.8% 0.9% 0.9% 1.0% 1.0%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Mar-16 Jun-16 Sept-16 Dec-16 Mar-17
De
linqu
e
nc
y
Net Charg
e
-o
ff
s
Credit Metrics
25
Commercial Lending
At March 31, 2017, floorplan financing represented 94% of commercial
portfolio
$3.6 $3.4 $3.2 $3.2 $3.3
$1.2 $1.2 $1.2 $1.4
$1.5
2,147 2,146 2,143 2,150 2,138
1,400
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Europe Commercial Receivables Outstanding ($B) Latin America Commercial Receivables Outstanding ($B)
$4.6 $4.4 $4.6
$4.8 $4.8
Number of Dealers
26
SAIC-GMAC - China Joint Venture
GMF owns a 35% equity stake in SAIC-GMAC joint venture
− Joint venture began operations in 2004
− Ownership stake gives GMF a presence in the largest auto market
− Results reflected in financial statements under equity method
China market:
− GM’s market share for Q1 2017 was 14.9%; industry forecasted to grow in the low single digits in 2017
− Car purchases are primarily for cash in China; financing penetration relatively low compared to other regions
− Auto loans typically have high down payment, low LTV and low charge-offs
Three months ended
Mar-17 Dec-16 Mar-16
China JV as a % of SGM1 Retail Sales2 26.2% 36.3% 23.2%
Retail Originations ($B)2 $1.7 $3.0 $1.7
Ending Earning Assets ($B)
Retail $8.3 $8.5 $7.2
Commercial3 $3.0 $2.6 $3.0
Net Retail Charge-offs4 0.1% 0.2% 0.4%
Equity Income ($M) $47 $42 $36
1. SAIC General Motors Sales Co., Ltd.
2. Includes off-balance sheet contracts originated for third parties
3. Commercial finance 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
27
GM Financial Key Strengths
Strategic interdependence with GM
− GM priority to grow GM Financial
− Expansion of captive presence in North America; captive penetration levels in International
Operations
Full suite of auto finance solutions offered in served markets with incremental
growth opportunities
− Operations covering over 85% of GM’s worldwide sales
− Additional product offerings and enhancements
Solid global funding platform supported by investment grade ratings
− Committed bank lines, well-established global 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 $12.4B at March 31, 2017
− Earned $260M in pre-tax income in Q1 2017; on track to double 2014 calendar-year earnings
when full captive penetration levels are achieved
Experienced and seasoned management team operating across business and
economic cycles
For more information, visit
gmfinancial.com