GM Financial Reports Second Quarter 2020 Operating Results

  • Second quarter net income of $173 million
  • Retail loan and operating lease originations of $11.9 billion for the second quarter
  • Earning assets of $94.0 billion at June 30, 2020
  • Available liquidity of $25.0 billion at June 30, 2020

FORT WORTH, Texas--()--GENERAL MOTORS FINANCIAL COMPANY, INC. (“GM Financial” or the “Company”) announced net income of $173 million for the quarter ended June 30, 2020, compared to $167 million for the quarter ended March 31, 2020, and $403 million for the quarter ended June 30, 2019. Net income for the six months ended June 30, 2020 was $340 million, compared to $674 million for the six months ended June 30, 2019.

Retail loan originations were $8.7 billion for the quarter ended June 30, 2020, compared to $6.5 billion for the quarter ended March 31, 2020, and $7.1 billion for the quarter ended June 30, 2019. Retail loan originations for the six months ended June 30, 2020 were $15.2 billion, compared to $14.3 billion for the six months ended June 30, 2019. The outstanding balance of retail finance receivables, net of fees was $46.5 billion at June 30, 2020, compared to $42.3 billion at December 31, 2019 and $42.7 billion at June 30, 2019.

Operating lease originations were $3.2 billion for the quarter ended June 30, 2020, compared to $5.0 billion for the quarter ended March 31, 2020, and $5.9 billion for the quarter ended June 30, 2019. Operating lease originations for the six months ended June 30, 2020 were $8.2 billion, compared to $11.1 billion for the six months ended June 30, 2019. Leased vehicles, net was $39.6 billion at June 30, 2020, compared to $42.1 billion at December 31, 2019 and $42.9 billion at June 30, 2019.

The outstanding balance of commercial finance receivables, net of fees was $7.9 billion at June 30, 2020, compared to $12.1 billion at December 31, 2019 and $13.0 billion at June 30, 2019.

Retail finance receivables 31-60 days delinquent were 2.2% of the portfolio at June 30, 2020 and 2.5% at June 30, 2019. Accounts more than 60 days delinquent were 1.3% of the portfolio at June 30, 2020 and 1.2% at June 30, 2019.

Annualized net charge-offs were 1.5% of average retail finance receivables for the quarter ended June 30, 2020 and 1.4% for the quarter ended June 30, 2019. For the six months ended June 30, 2020, annualized net charge-offs were 1.6%, compared to 1.5% for the six months ended June 30, 2019.

The Company had total available liquidity of $25.0 billion at June 30, 2020, consisting of $6.5 billion of cash and cash equivalents, $15.2 billion of borrowing capacity on unpledged eligible assets, $0.3 billion of borrowing capacity on committed unsecured lines of credit, $1.0 billion of borrowing capacity on the Junior Subordinated Revolving Credit Facility from GM, and $2.0 billion of borrowing capacity on the GM Revolving 364-Day Credit Facility.

Earnings resulting from the Company's equity investment joint ventures that conduct automotive finance operations in China were $42 million for the quarter ended June 30, 2020, compared to $25 million for the quarter ended March 31, 2020, and $42 million for the quarter ended June 30, 2019. Earnings for the six months ended June 30, 2020 were $67 million, compared to $87 million for the six months ended June 30, 2019.

About GM Financial

General Motors Financial Company, Inc. is the wholly-owned captive finance subsidiary of General Motors Company and is headquartered in Fort Worth, Texas. In lieu of a conference call, management recorded remarks addressing the Company’s results of operations for the quarter ended June 30, 2020. This recording, along with the presentation slides and this release, will be posted to the Company’s website on July 29, 2020 by 11:00 a.m. central time. The recording and materials can be accessed via the Investor Relations section of the Company’s website at https://investor.gmfinancial.com.

Forward-Looking Statements

This release 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, 2019 and our subsequent quarterly reports on Form 10-Q. Such risks include - but are not limited to - the length and severity of the COVID-19 pandemic; GM's ability to sell new vehicles that we finance in the markets we serve; dealers' effectiveness in marketing our financial products to consumers; the viability of GM-franchised dealers that are commercial loan customers; the sufficiency, availability and cost of sources of financing, including credit facilities, securitization programs and secured and unsecured debt issuances; the adequacy of our underwriting criteria for loans and leases and the level of net charge-offs, delinquencies and prepayments on the loans and leases we purchase or originate; our ability to effectively manage capital or liquidity consistent with evolving business or operational needs, risk management standards and regulatory or supervisory requirements; the adequacy of our allowance for loan losses on our finance receivables; our ability to maintain and expand our market share due to competition in the automotive finance industry from a large number of banks, credit unions, independent finance companies and other captive automotive finance subsidiaries; changes in the automotive industry that result in a change in demand for vehicles and related vehicle financing; the effect, interpretation or application of new or existing laws, regulations, court decisions and accounting pronouncements; adverse determinations with respect to the application of existing laws, or the results of any audits from tax authorities, as well as changes in tax laws and regulations, supervision, enforcement and licensing across various jurisdictions; the prices at which used vehicles are sold in the wholesale auction markets; vehicle return rates, our ability to estimate residual value at the inception of a lease and the residual value performance on vehicles we lease; interest rate fluctuations and certain related derivatives exposure; our joint ventures in the Asia/Pacific region, which we cannot operate solely for our benefit and over which we have limited control; changes in the determination of LIBOR and other benchmark rates; our ability to secure private customer and employee data or our proprietary information, manage risks related to security breaches and other disruptions to our networks and systems and comply with enterprise data regulations in all key market regions; foreign currency exchange rate fluctuations and other risks applicable to our operations outside of the U.S.; and changes in local, regional, national or international economic, social or political 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.

General Motors Financial Company, Inc.

Consolidated Statements of Income

(Unaudited, in millions)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2020

 

2019

 

2020

 

2019

Revenue

 

 

 

 

 

 

 

Finance charge income

$

966

 

 

$

1,008

 

 

$

1,972

 

 

$

1,995

 

Leased vehicle income

2,386

 

 

2,512

 

 

4,849

 

 

5,021

 

Other income

71

 

 

119

 

 

163

 

 

243

 

Total revenue

3,423

 

 

3,639

 

 

6,984

 

 

7,259

 

Costs and expenses

 

 

 

 

 

 

 

Operating expenses

345

 

 

377

 

 

703

 

 

747

 

Leased vehicle expenses

1,779

 

 

1,637

 

 

3,476

 

 

3,451

 

Provision for loan losses

327

 

 

179

 

 

793

 

 

354

 

Interest expense

788

 

 

952

 

 

1,623

 

 

1,899

 

Total costs and expenses

3,239

 

 

3,145

 

 

6,595

 

 

6,451

 

Equity income

42

 

 

42

 

 

67

 

 

87

 

Income before income taxes

226

 

 

536

 

 

456

 

 

895

 

Income tax provision

53

 

 

133

 

 

116

 

 

221

 

Net income

173

 

 

403

 

 

340

 

 

674

 

Less: cumulative dividends on preferred stock

22

 

 

22

 

 

45

 

 

45

 

Net income attributable to common shareholder

$

151

 

 

$

381

 

 

$

295

 

 

$

629

 

Consolidated Balance Sheets

(Unaudited, in millions)

 

June 30, 2020

 

December 31, 2019

ASSETS

 

 

 

Cash and cash equivalents

$

6,512

 

 

$

3,311

 

Finance receivables, net

 

52,262

 

 

 

53,473

 

Leased vehicles, net

 

39,601

 

 

 

42,055

 

Goodwill

 

1,167

 

 

 

1,185

 

Equity in net assets of non-consolidated affiliates

 

1,484

 

 

 

1,455

 

Related party receivables

 

1,570

 

 

 

678

 

Other assets

 

8,729

 

 

 

7,060

 

Total assets

$

111,325

 

 

$

109,217

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Liabilities

 

 

 

Secured debt

$

40,308

 

 

$

39,959

 

Unsecured debt

 

51,944

 

 

 

48,979

 

Deferred income

 

3,185

 

 

 

3,648

 

Related party payables

 

65

 

 

 

82

 

Other liabilities

 

4,770

 

 

 

3,823

 

Total liabilities

 

100,272

 

 

 

96,491

 

Total shareholders' equity

 

11,053

 

 

 

12,726

 

Total liabilities and shareholders' equity

$

111,325

 

 

$

109,217

 

Operational and Financial Data

(Unaudited, Dollars in millions)

 

Three Months Ended June 30,

 

Six Months Ended June 30,

Originations

2020

 

2019

 

2020

 

2019

Retail finance receivables originations

$

8,693

 

$

7,113

 

$

15,190

 

$

14,275

Lease originations

$

3,165

 

$

5,911

 

$

8,205

 

$

11,121

   

 

Three Months Ended June 30,

 

Six Months Ended June 30,

Average Earning Assets

2020

 

2019

 

2020

 

2019

Average retail finance receivables

$

44,636

 

$

42,447

 

$

43,564

 

$

42,018

Average commercial finance receivables

 

10,061

 

 

12,606

 

 

10,668

 

 

12,389

Average finance receivables

 

54,697

 

 

55,053

 

 

54,232

 

 

54,407

Average leased vehicles, net

 

40,346

 

 

42,998

 

 

41,028

 

 

43,216

Average earning assets

$

95,043

 

$

98,051

 

$

95,260

 

$

97,623

 

Ending Earning Assets

June 30, 2020

 

December 31, 2019

Retail finance receivables, net of fees

$

46,489

 

 

$

42,268

 

Commercial finance receivables, net of fees

7,884

 

 

12,149

 

Leased vehicles, net

39,601

 

 

42,055

 

Ending earning assets

$

93,974

 

 

$

96,472

 

 

Finance Receivables

June 30, 2020

 

December 31, 2019

Retail

 

 

 

Retail finance receivables, net of fees

$

46,489

 

 

$

42,268

 

Less: allowance for loan losses

(2,044

)

 

(866

)

Total retail finance receivables, net

44,445

 

 

41,402

 

Commercial

 

 

 

Commercial finance receivables, net of fees

7,884

 

 

12,149

 

Less: allowance for loan losses

(67

)

 

(78

)

Total commercial finance receivables, net

7,817

 

 

12,071

 

Total finance receivables, net

$

52,262

 

 

$

53,473

 

 

Allowance for Loan Losses

June 30, 2020

 

December 31, 2019

Allowance for loan losses as a percentage of retail finance receivables, net of fees

4.4

%

 

2.0

%

Allowance for loan losses as a percentage of commercial finance receivables, net of fees

0.8

%

 

0.6

%

Delinquencies

June 30, 2020

 

June 30, 2019

Loan delinquency as a percentage of ending retail finance receivables:

 

 

 

31 - 60 days

2.2

%

 

2.5

%

Greater than 60 days

1.3

 

 

1.2

 

Total

3.5

%

 

3.7

%

 

Three Months Ended June 30,

 

Six Months Ended June 30,

Charge-offs and Recoveries

2020

 

2019

 

2020

 

2019

Charge-offs

$

256

 

 

$

279

 

 

$

596

 

 

$

586

 

Less: recoveries

 

(89

)

 

 

(132

)

 

 

(245

)

 

 

(277

)

Net charge-offs

$

167

 

 

$

147

 

 

$

351

 

 

$

309

 

Net charge-offs as an annualized percentage of average retail finance receivables

 

1.5

%

 

 

1.4

%

 

 

1.6

%

 

 

1.5

%

 

Three Months Ended June 30,

 

Six Months Ended June 30,

Operating Expenses

2020

 

2019

 

2020

 

2019

Operating expenses as an annualized percentage of average earning assets

1.5

%

 

1.5

%

 

1.5

%

 

1.5

%

 

 

Contacts

Investor Relations contact:
Stephen Jones
Vice President, Investor Relations
(817) 302-7119
Investors@gmfinancial.com

Contacts

Investor Relations contact:
Stephen Jones
Vice President, Investor Relations
(817) 302-7119
Investors@gmfinancial.com