OneMain Holdings, Inc. Reports First Quarter 2022 Results

OneMain Holdings, Inc. (NYSE: OMF), the leader in offering nonprime customers responsible access to credit, today reported pretax income of $396 million and net income of $301 million for the first quarter of 2022, compared to $546 million and $413 million, respectively, in the prior year quarter. Earnings per diluted share were $2.36 in the first quarter of 2022, compared to $3.06 in the prior year quarter.

On April 28, 2022, OneMain declared a quarterly dividend of $0.95 per share, payable on May 13, 2022, to record holders of the Company's common stock as of the close of business on May 9, 2022.

During the quarter, the Company repurchased approximately 2.3 million shares of common stock for $110 million.

“We had a strong start to 2022 with a very good quarter underpinned by continued robust demand for our core loan product and bolstered by new products and channels,” said Doug Shulman, Chairman and CEO of OneMain. “We continue to feel great about our growth prospects in 2022 and beyond.”

The following segment results are reported on a non-GAAP basis. Refer to the required reconciliations of non-GAAP to comparable GAAP measures at the end of this press release.

Consumer and Insurance Segment (“C&I”)

C&I generated adjusted pretax income of $398 million and adjusted net income of $299 million for the first quarter of 2022, compared to $607 million and $455 million, respectively, in the prior year quarter. Adjusted earnings per diluted share were $2.35 for the first quarter of 2022, compared to $3.37 in the prior year quarter. The decline was primarily driven by the normalizing credit environment.

Management runs the business based on C&I capital generation, which it defines as C&I adjusted net income excluding the after-tax change in C&I allowance for finance receivable losses while still considering the current period C&I net charge-offs. C&I capital generation was $280 million for the first quarter of 2022, representing a 6% decrease versus the prior year period.

Originations totaled $3.0 billion in the first quarter of 2022, up 30% from $2.3 billion in the prior year quarter. The percentage of secured originations was 52% in the first quarter of 2022, up from 50% in the prior year quarter.

Managed receivables, which include loans serviced for our whole loan sale partners, were $19.5 billion at March 31, 2022, up 11% from $17.6 billion at March 31, 2021.

Ending net finance receivables were $19.0 billion at March 31, 2022, up 8% from $17.6 billion at March 31, 2021.

Secured receivables were 52% of ending net finance receivables at March 31, 2022, consistent with March 31, 2021.

Average net finance receivables were $19.1 billion in the first quarter of 2022, up 7% from $17.8 billion in the prior year quarter.

Interest income in the first quarter of 2022 was $1.1 billion, up 3% compared to the prior year quarter, reflecting higher average net finance receivables, partially offset by a lower portfolio yield.

Yield was 23.11% in the first quarter of 2022, down from 24.04% in the prior year quarter. The decrease generally reflected the impact of higher credit quality originations with attractive returns that are contributing to our portfolio growth, and higher 90+ day delinquent receivables.

The provision for finance receivable losses was $237 million in the first quarter of 2022, up $240 million compared to the prior year period, primarily driven by the normalization of the credit environment. The prior year period results included a significant reduction in our allowance for finance receivable losses associated with an improved credit environment, as well as historically low net charge-offs.

The 30-89 day delinquency ratio, excluding credit cards, was 2.25% at March 31, 2022, down from 2.43% at December 31, 2021, and up from 1.57% at March 31, 2021.

The 90+ day delinquency ratio, excluding credit cards, was 2.21% at March 31, 2022, up from 2.00% at December 31, 2021, and 1.82% at March 31, 2021.

The net charge-off ratio, excluding credit cards, was 5.58% in the first quarter of 2022, up from 4.24% in the fourth quarter of 2021 and 4.67% in the prior year quarter.

Operating expense for the first quarter of 2022 was $348 million, up 8% from $323 million in the prior year quarter reflecting receivables growth and continued investments in the business.

Funding and Liquidity

As of March 31, 2022, the Company had principal debt balances outstanding of $17.8 billion, 44% of which was secured. The Company had $640 million of cash and cash equivalents, which included $265 million of cash and cash equivalents held at their regulated insurance subsidiaries or for other operating activities that are unavailable for general corporate purposes.

Cash and cash equivalents, together with the Company’s potential borrowings of $1.0 billion of undrawn committed capacity from a corporate revolver, $5.4 billion of undrawn committed capacity under the revolving conduit facilities, and $10.2 billion of unencumbered loans, provide a liquidity runway in excess of 24 months under numerous stress scenarios and assuming no access to the capital markets. This liquidity runway calculation contemplates all the cash needs of the Company.

Conference Call & Webcast Information

OneMain management will host a conference call and webcast to discuss the Company's results, outlook, and related matters at 8:30 am Eastern Time on Friday, April 29th, 2022. Both the call and webcast are open to the general public. The general public is invited to listen to the call by dialing 866-831-8616 (U.S. domestic) or 203-518-9873 (international), and using conference ID 35342, or via a live audio webcast through the Investor Relations section of the OneMain Financial website. For those unable to listen to the live broadcast, a replay will be available on our website beginning approximately two hours after the event. An investor presentation will be available on the Investor Relations page of OneMain’s website at www.omf.com prior to the start of the conference call.

About OneMain Holdings, Inc.

OneMain Financial (NYSE: OMF) is the leader in offering nonprime customers responsible access to credit and is dedicated to improving the financial well-being of hardworking Americans. We empower our customers to solve today’s problems and reach a better financial future through personalized solutions available online and in 1,400 locations across 44 states. OneMain is committed to making a positive impact on the people and the communities we serve. For additional information, please visit www.OneMainFinancial.com.

Use of Non-GAAP Financial Measures

We report the operating results of Consumer and Insurance using the Segment Accounting Basis, which (i) reflects our allocation methodologies for interest expense and operating costs, to reflect the manner in which we assess our business results and (ii) excludes the impact of applying purchase accounting (eliminates premiums/discounts on our finance receivables and long-term debt at acquisition, as well as the amortization/accretion in future periods). Consumer and Insurance adjusted pretax income (loss), Consumer and Insurance adjusted net income (loss), and Consumer and Insurance adjusted earnings (loss) per diluted share are key performance measures used to evaluate the performance of our business. Consumer and Insurance adjusted pretax income (loss) represents income (loss) before income taxes on a Segment Accounting Basis and excludes the expense associated with the cash-settled stock-based awards, direct costs associated with COVID-19, acquisition-related transaction and integration expenses, net loss resulting from repurchases and repayments of debt, and restructuring charges. We believe these non-GAAP financial measures are useful in assessing the profitability of our segment.

We also use Consumer and Insurance pretax capital generation and Consumer and Insurance capital generation, non-GAAP financial measures, as a key performance measure of our segment. Consumer and insurance pretax capital generation represents Consumer and Insurance adjusted pretax income, as discussed above, and excludes the change in our Consumer and Insurance allowance for finance receivable losses in the period while still considering the Consumer and Insurance net charge-offs during the period. Consumer and Insurance capital generation represents the after-tax effect of Consumer and Insurance pretax capital generation. We believe that these non-GAAP measures are useful in assessing the capital created in the period impacting the overall capital adequacy of the Company. We believe that the Company’s reserves, combined with its equity, represent the Company's loss absorption capacity.

We utilize these non-GAAP measures in evaluating our performance. Additionally, these non-GAAP measures are consistent with the performance goals established in OMH’s executive compensation program. These non-GAAP financial measures should be considered supplemental to, but not as a substitute for or superior to, income (loss) before income taxes, net income, or other measures of financial performance prepared in accordance with GAAP.

This document contains summarized information concerning OneMain Holdings, Inc. (the “Company”) and the Company’s business, operations, financial performance and trends. No representation is made that the information in this document is complete. For additional financial, statistical and business related information see the Company's most recent Annual Report on Form 10-K (“Form 10-K”) and Quarterly Reports on Form 10-Q (“Form 10-Qs”) filed with the U.S. Securities and Exchange Commission (the “SEC”), as well as the Company’s other reports filed with the SEC from time to time. Such reports are or will be available in the Investor Relations section of the Company's website (www.omf.com) and the SEC's website (www.sec.gov).

Cautionary Note Regarding Forward-Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by or that otherwise include the words “anticipates,” “appears,” “are likely,” “assumes,” “believes,” “can,” “continues,” “could,” “estimates,” “expects,” “forecasts,” “foresees,” “goal,” “intends,” “likely,” “objective,” “plans,” “projects,” “target,” “trend,” “remains,” and similar expressions or future or conditional verbs such as “could,” “may,” “might,” “should,” “will” or “would” are intended to identify forward-looking statements, but these words are not the exclusive means of identifying forward-looking statements.

Forward-looking statements are not statements of historical fact but instead represent only management’s current beliefs regarding future events, objectives, goals, projections, strategies, performance, and future plans, and underlying assumptions and other statements related thereto. You should not place undue reliance on these forward-looking statements. By their nature, forward-looking statements are subject to risks, uncertainties, assumptions and other important factors that may cause actual results, performance or achievements to differ materially from those expressed in or implied by such forward-looking statements. Important factors that could cause actual results, performance, or achievements to differ materially from those expressed in or implied by forward-looking statements include, without limitation, the following: adverse changes in general economic conditions, including the interest rate environment and the financial markets; risks associated with COVID-19 and the measures taken in response thereto; the sufficiency of our allowance for finance receivable losses; increased levels of unemployment and personal bankruptcies; natural or accidental events such as earthquakes, hurricanes, pandemics, floods or wildfires affecting our customers, collateral, or our facilities; a failure in or breach of our information, operational or security systems or infrastructure or those of third parties, including as a result of cyber-attacks, war or other disruptions; the adequacy of our credit risk scoring models; adverse changes in our ability to attract and retain employees or key executives; increased competition or adverse changes in customer responsiveness to our distribution channels or products; changes in federal, state, or local laws, regulations, or regulatory policies and practices or increased regulatory scrutiny of our industry; risks associated with our insurance operations; the costs and effects of any actual or alleged violations of any federal, state, or local laws, rules or regulations; the costs and effects of any fines, penalties, judgments, decrees, orders, inquiries, investigations, subpoenas, or enforcement or other proceedings of any governmental or quasi-governmental agency or authority; our substantial indebtedness and our continued ability to access the capital markets and maintain adequate current sources of funds to satisfy our cash flow requirements; our ability to comply with all of our covenants; the effects of any downgrade of our debt ratings by credit rating agencies; and other risks and uncertainties described in the “Risk Factors” and “Management’s Discussion and Analysis” sections of the Company’s most recent Form 10-K filed with the SEC and in the Company’s other filings with the SEC from time to time.

The liquidity runway scenario disclosed in the press release is based on management’s estimates and assumptions for internal strategic planning purposes and does not constitute guidance or financial projections and should not be regarded or relied on as such.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. You should specifically consider the factors identified in this document that could cause actual results to differ before making an investment decision to purchase our securities. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

Forward looking statements included in this document speak only as of the date on which they were made. We undertake no obligation to update or revise any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events, whether as a result of new information, future developments or otherwise, except as required by law.