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American Honda Finance

American Honda Finance Corporation (AHFC) is a California corporation that was incorporated on February 6, 1980. Unless otherwise indicated by the context, all references to the “Company”, “we”, “us”, and “our” in this report include AHFC and its consolidated subsidiaries, and references to “AHFC” refer solely to American Honda Finance Corporation (excluding its subsidiaries). AHFC is a wholly-owned subsidiary of American Honda Motor Co. Inc. (AHM). Honda Canada Finance Inc. (HCFI) is a majority-owned subsidiary of AHFC. Noncontrolling interest in HCFI is held by Honda Canada Inc. (HCI), an affiliate of AHFC. AHM is a wholly-owned subsidiary and HCI is an indirect wholly-owned subsidiary of Honda Motor Co. Ltd. (HMC). AHM and HCI are the sole authorized distributors of Honda and Acura products including motor vehicles, parts, and accessories in the United States and Canada. AHFC’s principal executive offices are located at 20800 Madrona Avenue, Torrance, California 90503. We provide various forms of financing in the United States and Canada to purchasers and lessees of Honda and Acura products and authorized independent dealers of Honda and Acura products. Our primary focus, in collaboration with AHM and HCI, is to provide support for the sale of Honda and Acura products and maintain customer and dealer satisfaction and loyalty. Our business is substantially dependent upon the sale of those Honda and Acura products in the United States and Canada and the percentage of those sales financed by us.

Calendar

24 Jun 21
27 Jul 21
31 Mar 22
Quarter (USD)
Mar 21 Dec 20 Sep 20 Jun 20
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Annual (USD)
Mar 21 Mar 20 Mar 19 Mar 18
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Financial data from company earnings reports.

Cash burn rate (estimated) Burn method: Change in cash Burn method: Operating income/loss Burn method: FCF (opex + capex)
Last Q Avg 4Q Last Q Avg 4Q Last Q Avg 4Q
Cash on hand (at last report) 2.25B 2.25B 2.25B 2.25B 2.25B 2.25B
Cash burn (monthly) 396.33M (positive/no burn) (positive/no burn) (positive/no burn) (positive/no burn) (positive/no burn)
Cash used (since last report) 1.54B n/a n/a n/a n/a n/a
Cash remaining 711.35M n/a n/a n/a n/a n/a
Runway (months of cash) 1.8 n/a n/a n/a n/a n/a

Beta Read what these cash burn values mean

Financial report summary

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Risks
  • Our results of operations, cash flows, and financial condition are substantially dependent upon HMC and the sale of Honda and Acura products and any decline in the financial condition of HMC or the sales of Honda and Acura products could have a materially adverse impact on our financial condition, cash flows, and results of operations.
  • Because our operations are heavily dependent on retail sales of motor vehicles and other retail products, a decline in general business and economic conditions can have a significant adverse impact on our results of operations, cash flows, and financial condition.
  • If we are unable to compete successfully or if competition continues to increase in the businesses in which we operate, our results of operations, cash flows, and financial condition could be materially and adversely affected.
  • We are exposed to residual value risk on the vehicles we lease.
  • Vehicle recalls and other announcements may impact our business
  • Adverse economic conditions or changes in laws in states or provinces in which we have customer concentrations may negatively affect our results of operations, cash flows, and financial condition.
  • Our results of operations, cash flows, and financial condition may be adversely affected because of currency risk.
  • We need substantial capital to finance our operations and a disruption in our funding sources and access to the capital markets would have an adverse effect on our results of operations, cash flows, and financial condition.
  • Fluctuations in interest rates could have an adverse impact on our results of operations, cash flows, and financial condition.
  • Our borrowing costs and access to the debt capital markets depend significantly on our credit ratings, the credit ratings of HMC and the Keep Well Agreements.
  • We are subject to consumer and dealer credit risk, which could adversely impact our results of operations, cash flows, and financial condition.
  • We are required to apply significant judgments and assumptions in the preparation of our financial statements, and actual results may vary from those assumed in our judgments and assumptions.
  • The failure or commercial soundness of our counterparties and other financial institutions may have an adverse effect on our results of operations, cash flows, or financial condition.
  • Our results of operations may be adversely affected by the rate of prepayment of our financing and leasing contracts.
  • Our defined benefit plan costs and those of AHM and HCI may affect our financial condition, cash flows, and results of operations.
  • Changes in laws and regulations, or the application thereof, may adversely affect our business, results of operations, cash flows, and financial condition.
  • Financial or consumer regulations may adversely affect our business, results of operations, cash flows and financial condition.
  • A failure or interruption in our operations could adversely affect our results of operations and financial condition.
  • A security breach or a cyber attack may adversely affect our business, results of operations and financial condition.
Management Discussion
  • Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
  • Our primary focus, in collaboration with AHM and HCI, is to provide support for the sale of Honda and Acura products and maintain customer and dealer satisfaction and loyalty. To deliver this support effectively, we seek to maintain competitive cost of funds, efficient operations, and effective risk and compliance management. The primary factors influencing our results of operations, cash flows, and financial condition include the volume of Honda and Acura sales and the portion of those sales that we finance, our cost of funds, competition from other financial institutions, consumer credit defaults, and used motor vehicle prices.
  • A substantial portion of our consumer financing business is acquired through incentive financing programs sponsored by AHM and HCI. The volume of these incentive financing programs and the allocation of those programs between retail loans and leases may vary from fiscal period to fiscal period depending upon the respective marketing strategies of AHM and HCI. AHM and HCI’s marketing strategies are based in part on their business planning and control, in which we do not participate. Therefore, we cannot predict the level of incentive financing programs AHM and HCI may sponsor in the future. Our consumer financing acquisition volumes are substantially dependent on the extent to which incentive financing programs are offered. Increases in incentive financing programs generally increase our financing penetration rates, which typically results in increased financing acquisition volumes for us. The amount of subsidy payments we receive from AHM and HCI is dependent on the terms of the incentive financing programs and the interest rate environment. Subsidy payments are received upon acquisition and recognized in revenue throughout the life of the loan or lease; therefore, a significant change in the level of incentive financing programs in a fiscal period typically only has a limited impact on our results of operations for that period. The amount of subsidy income we recognize in a fiscal period is dependent on the cumulative level of subsidized contracts outstanding that were acquired through incentive financing programs.
Content analysis
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