OneMain shares fall 4.7% after Q3 profit estimate miss

OneMain (OMF) shares fell 4.7% in regular trading as of 3:59 p.m. ET, from a regular-session close of $59.34, after it missed third-quarter profit estimates but topped revenue estimates, the company said on Oct. 30 in its results release.

Adjusted earnings per share for the Consumer and Insurance segment were $1.51, below the $1.59 consensus estimate compiled by Finnhub. Revenue for the segment was $1.7 billion, above the $1.23 billion estimate also compiled by Finnhub.

Diluted earnings per share for the company were $1.60 in the quarter, compared with $1.67 a year earlier. Net income was $185 million, against $199 million in the prior-year quarter.

The company also declared a quarterly dividend of $1.05 per share, payable Nov. 13 to holders of record at the close of business on Nov. 9. During the quarter it repurchased about 538 thousand shares of common stock for $34 million.

Here's how the company did:

• Diluted EPS: $1.60 vs. $1.67 a year earlier
• Consumer and Insurance adjusted EPS: $1.51 vs. $1.90 a year earlier, and $1.59 expected, according to Finnhub
• Revenue: $1.7 billion vs. $1.23 billion expected, according to Finnhub

Consumer and Insurance results

Adjusted pretax income for the segment was $232 million, and adjusted net income was $174 million. The year-earlier figures were $303 million and $227 million.

Capital generation was $284 million, up from $272 million a year earlier. The company said the increase was driven by receivables growth, partially offset by higher net charge-offs.

Managed receivables were $28.1 billion at Sept. 30, up 9% from $25.9 billion a year earlier. Consumer loan originations totaled $4.5 billion, up 17% from $3.9 billion.

Credit and costs

Interest expense was $345 million, up 8% from $320 million, due to a larger average debt balance to support receivables growth and a higher average cost of funds.

The provision for finance receivable losses was $615 million, up from $488 million a year earlier. The consumer loan net charge-off ratio was 6.89%, up from 6.67%.

Operating expense was $453 million, up 6% from $427 million, which the company attributed to receivable growth and strategic investments in the business.

Funding and liquidity

As of Sept. 30, principal debt outstanding was $24.4 billion, 52% of it secured. Cash and cash equivalents were $936 million, of which $268 million was held at regulated insurance subsidiaries or for other operating activities and is unavailable for general corporate purposes.

The company also had $1.0 billion of undrawn committed capacity from an unsecured corporate revolver, $6.5 billion of undrawn capacity under revolving conduit facilities and credit card variable funding note facilities, and $12.3 billion of unencumbered receivables.

Chairman and CEO Doug Shulman said, "We delivered another strong quarter, building on the positive momentum across our business and demonstrating our ability to drive growth while maintaining rigorous credit discipline."

OneMain serves nonprime consumers across 48 states, online and in more than 1,300 locations.