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OneMain Holdings, Inc. (OMF)·Q1 2025 Earnings Summary

Executive Summary

  • OneMain delivered solid Q1 2025: GAAP diluted EPS $1.78 and C&I adjusted EPS $1.72, with net income $213M and income before tax $275M, supported by improved credit and disciplined growth .
  • EPS beat S&P Global consensus: Primary EPS $1.72 actual vs $1.57 consensus (+$0.15, ~+10%); revenue comparisons are not like-for-like under S&P’s definition, so we focus on EPS for estimate context.*
  • Credit quality improved: 30+ delinquency ratio fell to 5.16% (from 5.76% in Q4) and 90+ to 2.38% (from 2.52%); consumer loan net charge-offs were 7.83% (YoY -75 bps), reinforcing a trajectory from peak losses in 2024 .
  • 2025 guidance maintained: managed receivables growth 5–8%, total revenue growth 6–8%, C&I net charge-offs 7.5–8.0%, and OpEx ratio ≈6.6%; quarterly dividend of $1.04 was declared again .
  • Funding/liquidity remain a differentiator: $627M cash, $1.1B undrawn revolver, $6.4B undrawn conduits/VFN, and $10.2B unencumbered receivables; $1.5B of secured and unsecured issuance completed during the quarter .

What Went Well and What Went Wrong

  • What Went Well

    • “We feel great about the results... decisive actions to tighten underwriting, optimize pricing... now showing up in the bottom line” (CEO). Capital generation up 25% YoY to $194M; C&I adjusted EPS up 19% YoY to $1.72 .
    • Credit trends improved: 30+ delinquency 5.16% (Q4: 5.76%), 90+ delinquency 2.38% (Q4: 2.52%); consumer NCOs 7.83% (YoY -75 bps). “These results reinforce our view that we are coming down from peak losses in 2024” (CEO) .
    • Growth with discipline: originations $3.0B (+20% YoY), consumer loan yield 22.4% (+20 bps q/q, +28 bps YoY), managed receivables $24.6B (+12% YoY). “We continue to acquire high-quality customers at attractive pricing” (CEO) .

  • What Went Wrong

    • Interest expense rose 13% YoY to $311M with increased average debt to support receivables growth; interest expense ~5.4% of average net receivables and expected to remain steady for 2025 (CFO) .
    • Provision remained elevated at $456M (though down q/q), while allowance coverage stayed ~flat at 11.5% given conservative macro overlay (CFO) .
    • Credit card losses remain high (seasonal/seasoning): card NCOs 19.8% in Q1, though management still expects 15–17% longer-term once the book matures (CFO) .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Interest Income ($B)$1.282 $1.320 $1.308
Total Other Revenues ($B)$0.182 $0.160 $0.188
Net Interest Income ($B)$0.981 $1.009 $0.996
Provision for Finance Receivable Losses ($B)$0.512 $0.523 $0.456
Operating Expenses ($B)$0.401 $0.433 $0.404
Income Before Income Taxes ($B)$0.207 $0.164 $0.275
Net Income ($B)$0.157 $0.126 $0.213
Diluted EPS (GAAP)$1.31 $1.05 $1.78
C&I Adjusted Diluted EPS$1.26 $1.16 $1.72

Segment metrics and scale

MetricQ3 2024Q4 2024Q1 2025
C&I Adjusted Pretax Income ($M)$202 $185 $275
C&I Adjusted Net Income ($M)$151 $139 $207
Managed Receivables ($B)$24.319 $24.739 $24.597

KPIs

KPIQ3 2024Q4 2024Q1 2025
Consumer Loan Originations ($B)$3.712 $3.504 $3.022
30+ Days Delinquency Ratio5.63% 5.76% 5.16%
90+ Days Delinquency Ratio2.49% 2.52% 2.38%
Net Charge-off Ratio (Consumer Loans)7.33% 7.63% 7.83%
Consumer Loan Yield22.1% 22.2% 22.4%
Allowance Ratio11.46% 11.48% 11.52%
Credit Card Receivables ($M)550 643 676
Auto Finance Receivables ($B)2.009 2.122 2.220

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024 call)Current Guidance (Q1 2025 call)Change
Managed Receivables Growth (YoY)FY 20255%–8% 5%–8% Maintained
Total Revenue Growth (YoY)FY 20256%–8% 6%–8% Maintained
C&I Net Charge-offsFY 20257.5%–8.0% (1H > FY avg; 2H <) 7.5%–8.0% Maintained
Operating Expense RatioFY 2025≈6.6% ≈6.6% Maintained
Quarterly DividendOngoing$1.04 declared 1/31/25 $1.04 declared 4/29/25 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Macro/tariffsFocus on resilient funding and liquidity; improved delinquency into year-end 2024 .CEO: monitoring trade/tariff uncertainty; not seeing consumer weakness; 24 months liquidity runway; fixed-rate, staggered debt .Stable to positive on resilience
Credit trendsCalled peak losses in 1H’24; 30–89 DPD improved at YE; confident in loss trajectory .30+ DPD 5.16% and 90+ DPD 2.38%; consumer NCO 7.8% YoY better; expect further improvement in 2025 .Improving
Pricing/yieldConsumer yield improved to 22.2% in Q4; modest further improvement expected, mix-dependent .Consumer yield 22.4%; expect modest improvement subject to competition, delinquency, product mix (CFO) .Slightly improving
Competitive landscapeConstructive environment; ability to price for risk; spreads tighter than peers .Competitive environment remains constructive; double-digit originations; strong funding access supports pricing (CEO) .Stable
Funding/liquidityBest-in-class access; unsecured and ABS issuance; expanded whole-loan flow .$1.5B raised (auto ABS ~5.5%, $600M 6.75% unsecured); bank facilities $7.5B; robust liquidity .Strong
ILC applicationNot discussed in Q3 8-K; strategy focus on multi-product platform .ILC would be additive: broader reach, deposit funding diversification, card issuing bank role; parent not a BHC; timing uncertain .New option; potential positive
CECL/ReservesCoverage ~11.5%; macro overlay maintained amid uncertainty .Coverage ~11.5%; macro assumption (unemployment ~6% peak in ~12 months) raised modestly q/q; mix effects from cards/auto .Cautious, steady
Card performanceSmall, growing; high revenue yield; still seasoning .Card NCOs 19.8% (seasonal); long-term 15–17% target; book “teenage,” maturing over time .Seasoning; steady with LT targets
Auto financeIntegration of Foursight; growth in franchise dealers .Receivables ~$2.5B; credit in line with expectations; building a scaled platform .Growing

Management Commentary

  • “We feel great about the results in the first quarter… [actions] to tighten our underwriting, optimize pricing… are now showing up in the bottom line, and have put us on an upward trajectory of capital generation and earnings.” (CEO)
  • “We are maintaining our 2025 guidance… grow managed receivables by 5% to 8%… total revenue by 6% to 8%… C&I net charge-offs of 7.5% to 8%… and an operating expense ratio of approximately 6.6%.” (CFO)
  • “We maintain 24 months of liquidity runway… interest expense to stay within a tight range since we have set up our debt stack with fixed-rate, long-dated staggered maturities.” (CEO)
  • “30+ delinquency at March 31… was 5.08%, down 49 bps YoY… We anticipate these positive delinquency trends will continue to enhance our loss performance in the upcoming quarters.” (CFO)
  • On ILC: “It would allow us to… serve more customers… diversify funding, simplify our operating model and drive some operating efficiencies in our credit card business… with the parent not becoming a bank holding company.” (CEO)

Q&A Highlights

  • ILC optionality: Unified rate structure, deposit funding diversification, issuing bank for card; not necessary but additive; parent would not be a BHC (CEO) .
  • Reserves/CECL: Macro overlay modestly raised; unemployment peak assumption ~6% in ~12 months; reserve path depends on mix (cards vs. auto) and macro; willingness to “wait and see” (CFO) .
  • Card losses: Q1 card NCOs 19.8% (seasonal/seasoning) vs long-term 15–17% target; returns supported by >30% revenue yield (CFO) .
  • Yield/competition: Expect modest yield improvement; environment remains constructive; funding advantage vs peers supports pricing (CEO/CFO) .
  • Underwriting posture: 30% stress overlay remains; micro-adjustments by segment; not loosening given uncertainty (CEO) .
  • Recoveries: $88M in Q1; pricing for bulk sales slightly down YoY but stable demand; above pre-pandemic recovery levels (CFO) .

Estimates Context

MetricPeriodConsensusActualSurprise
Primary EPS (S&P Global)Q1 2025$1.57*$1.72*+$0.15 (+9.7%)*
  • Revenue comparisons are not like-for-like under S&P’s “Revenue” definition for specialty finance; we therefore anchor on EPS for estimate comparisons.*
  • Outlook: With delinquency trends improving and yields modestly higher, estimate revisions for EPS are biased upward, while credit-card seasoning and macro overlay are the key sensitivities (management maintained 2025 ranges) .
    *Values retrieved from S&P Global.

Key Takeaways for Investors

  • Credit inflection is the story: faster improvement in delinquencies and YoY NCOs supports the EPS beat and maintained 2025 ranges; continued progress here is the primary stock driver .
  • Earnings power building: originations +20% YoY, yields modestly higher, and operating expense ratio ~6.6% underpin capital generation momentum into 2H25 .
  • Funding/liquidity edge remains a competitive moat amid volatility (prefunded, diversified, fixed-rate debt stack) .
  • Card is still seasoning (near-term NCOs elevated) but high revenue yield supports attractive LT returns; watch for stabilization vs 15–17% NCO target .
  • ILC is a free option: potential for broader reach, diversified funding, and card-issuing efficiency without parent BHC constraints; timing uncertain .
  • Dividend durability reiterated with another $1.04 declaration; capital return likely paced by macro and excess capital generation .
  • External validation: AM Best affirmed B++/“bbb” ratings of OMF’s insurance subs with stable outlooks, reinforcing insurance strength within the platform .

Additional Notes

  • Dividend declared: $1.04 per share, payable May 16, 2025; Q1 buybacks: 323K shares for $16M .
  • Liquidity detail: $627M cash; $1.1B undrawn revolver; $6.4B undrawn conduits/VFN; $10.2B unencumbered receivables .
  • 2025 capital markets actions: $900M auto ABS (~5.5%) and $600M unsecured at 6.75% (7-year, 3-year call) .