Santander Consumer USA (SC) Misses Q2 EPS by 36c

Santander Consumer USA (NYSE: SC) reported Q2 EPS of ($0.30), $0.36 worse than the analyst estimate of $0.06. Revenue for the quarter came in at $1.98 billion versus the consensus estimate of $1.97 billion.

Second Quarter of 2020 Highlights (variances compared to second quarter of 2019 ("Q2 2019"), unless otherwise noted

• Total auto originations of $7.8 billion, down 7%
  • Core retail auto loan originations of $2.1 billion, down 12%
  • Chrysler Capital loan originations of $4.7 billion, up 36%
  • Chrysler Capital lease originations of $989 million, down 61%
  • Chrysler average quarterly penetration rate of 37%, from 36%
  • Santander Bank, N.A. program originations of $1.7 billion
• Net finance and other interest income1 of $1.1 billion, down 7%
• 30-59 delinquency ratio of 4.3%, down 510 basis points
• 59-plus delinquency ratio2 of 2.4%, down 230 basis points
• Retail Installment Contract ("RIC") gross charge-off ratio of 11.1%, down 500 basis points
• Recovery rate of 46%, down from 60%
• RIC net charge-off ratio3 of 6.0%, down 40 basis points
• Troubled Debt Restructuring ("TDR") balance of $3.9 billion, down from $4.5 billion
• Return on average assets of (0.8)%, down from 3.2%
• $1.9 billion in asset-backed securities "ABS" issued
• Expense ratio of 1.7%, down from 2.0%
• Common equity tier 1 ("CET1") ratio of 13.4%, down from 15.7% as of June 30, 2019

Management Quotes

"The duration of the pandemic has created significant macroeconomic uncertainty, and the speed of the economic recovery will dictate our performance over the next several months. While certain indicators are trending positive, we anticipate a delayed reversion to normal. Our results this quarter demonstrate the resiliency of our portfolio, the effectiveness of the hardship programs we instituted and the strength of our business model. Our employees, dealers and customers continue to be our priority as we endeavor to provide them the highest levels of service in these trying times. In the past weeks, we have also responded to the calls for an end to systemic racism by starting a conversation with our employees and committing to take action to make our company a place where all employees are valued, feel safe and have an opportunity to succeed. In the process, we will make sustained and material differences in the way we view race and interact with each other," said Mahesh Aditya, SC President and CEO.

Fahmi Karam, SC Chief Financial Officer, added, "This quarter's strong credit performance reflects the impact of the pandemic relief we provided to our customers and the improvement in auction recovery rates, particularly towards the end of the quarter. We continued to build reserves this quarter due to the COVID-19 uncertainty and we remain well capitalized with a 13.4% CET1 ratio, combining for an industry leading loss absorbing capacity to manage through the pandemic and position us for long-term success."

For earnings history and earnings-related data on Santander Consumer USA (SC) click here.

You May Also Be Interested In

• Tesla plans 'flying' Roadster stunt at SpaceX Texas site as early as August
• Hydrofarm Holdings Group, Inc. (HYFM) Misses Q2 EPS by 134c
• Optimum Communications gets NYSE non-compliance notice over stock price