Navient Corporation · NASDAQ:NAVI
Navient — Q1 2023 Earnings Presentation
19 slides from Navient's earnings presentation, Apr 26, 2023
Slide 1: 2023 1st Quarter Earnings Call Presentation
2023 1 st Quarter Earnings Call Presentation April 26, 2023 NASDAQ: NAVI
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures
Forward-Looking Statements; Non-GAAP Financial Measures The following information is current as of March 31, 2023 (unless otherwise noted) and should be read in connection with Navient Corporation’s “Navient” Annual Report on 2022 Form 10-K for the year end December 31, 2022 (the “2022 Form 10-K”),
Slide 3: Consumer Lending, Federal Education Loans, Business Processing
Consumer Lending Federal Education Loans Business Processing Net interest margin Net interest margin Generated revenue of of 1.12% reflects our of 3.12% demonstrates $72 million continued success in the value of private managing interest rate education lending risk Revenue from traditional s
Slide 4: Operating Results
Operating Results Selected Financial Information and Ratios 1st Quarter 2023 Highlights Q1 23 Q4 22 Q1 22 • Adjusted Core EPS1, 2 of $1.06 - Core Earnings Return on Equity1 increased to 19% (In millions, except per share amounts) from 15% in the prior quarter GAAP Diluted EPS $0.86 $0.78 $1.67 • Ach
Slide 5: Federal Education Loans Segment
Federal Education Loans Segment Selected Financial Information and Ratios 1st Quarter 2023 Highlights Q1 23 Q4 22 Q1 22 Federal Education Loans ($ In millions) Segment net interest margin 1.12% 0.94% 1.04% Q1 23 Net Interest Margin: 112 bps Q1 23 Annualized Net Charge-off Rate: 22 bps FFELP Loans •
Slide 6: Consumer Lending Segment
Consumer Lending Segment Selected Financial Information and Ratios 1st Quarter 2023 Highlights Q1 23 Q4 22 Q1 22 Consumer Lending ($ In millions) Q1 23 Net Interest Margin: 312 bps Segment net interest margin 3.12% 2.87% 2.80% Q1 23 Annualized Net Charge-off Rate : 163 bps Consumer Loans • Achieved
Slide 7: Business Processing Segment
Business Processing Segment Selected Financial Information and Ratios 1st Quarter 2023 Highlights Q1 23 Q4 22 Q1 22 Business Processing ($ In millions) Government Services Revenue $40 $39 $49 Q1 23 EBITDA Margin 1: 7% Healthcare Services Revenue $32 $31 $45 Total Business Processing $72 $70 $94 • Ge
Slide 8: Financing & Capital Management
Financing & Capital Management 1st Quarter 2023 Capital Management 1st Quarter 2023 Financing Returned $106 million through share Unsecured debt reduced by over 10% repurchases & dividends ✓ Paid dividends of $21 million ✓ Retired $1 billion of unsecured debt ✓ Repurchased 4.9 million shares at an a
Slide 9: GAAP Results
GAAP Results (In millions, except per share amounts) Q1 23 Q4 22 Q1 22 Net income (loss) $111 $105 $255 Diluted earnings (loss) per common $0.86 $0.78 $1.67 share Operating expenses $185 $187 $205 Provision for loan losses $(14) $17 $16 Average Education Loans $62,552 $65,370 $73,415 Confidential an
Slide 10: 2023 Outlook
2023 Outlook 2023 Full Year Adjusted Core EPS Guidance: $3.15 - $3.30 1 Full Year 2023 Guidance Q1 2023 Actuals Core Earnings Return on Equity 1 Mid-Teens 19% Core Earnings Efficiency Ratio 1 55% – 58% 53% Adjusted Tangible Equity Ratio 1 8% – 9% 8.5% Net Interest Margin – 1.00% – 1.10% 1.12% Federa
Slide 11: Appendix
Appendix Confidential and proprietary information © 2023 Navient Solutions, LLC. All rights reserved. 11
Slide 12: Education Loan Portfolio Cash Flows
Education Loan Portfolio Cash Flows Projected Life of Loan Cash Flows over ~20 Years Enhancing Cash Flows $’s in Billions FFELP Cash Flows • Generated $0.4 billion of cash flows in Q1 2023 03/31/2023 Secured Residual (including O/C) $4.5 • Originated $168 million of new private education loans Floor
Slide 13: Education Loan Portfolio Cash Flows Over the Next Five Years
Education Loan Portfolio Cash Flows Over the Next Five Years Projected Annual Private Education Cash Flows Projected Annual FFELP Cash Flows $1.2 $1.2 Cash Flows assuming Cash Flows assuming call option can be trusts run to maturity $1.0 exercised at 10% $1.0 ($’s in Billions) ($’s in Billions) $0.8
Slide 14: Conservative Capital Structure Management
Conservative Capital Structure Management Long-Term Conservative Funding Approach Managing Unsecured Debt Maturities • Important to maintain our credit ratings which (par value, $ in billions) support ongoing access to the unsecured debt market • We pursue opportunities to repurchase debt in the ope
Slide 15: Other Segment
Other Segment Q1 2023 Unallocated Shared Services Expense Shared Services Overview $61 million Shared services are related to the Regulatory Related management of the entire company or shared Costs 3% CEO, Corporate by multiple reporting segments Marketing & Other HR 3% - Centralization creates cost
Slide 16: Notes on Non-GAAP Financial Measures
Notes on Non-GAAP Financial Measures (Dollars in Millions) In addition to financial results reported on a GAAP basis, Navient also provides certain performance measures which are non-GAAP financial measures. Definitions for the non- GAAP financial measures and reconciliations are provided below and
Slide 17: Notes on Non-GAAP Financial Measures
Notes on Non-GAAP Financial Measures (Dollars in Millions) 4. Core Earnings Efficiency Ratio – The Core Earnings Efficiency Ratio measures the company’s Adjusted Core Earnings expenses, which exclude restructuring and regulatory-related expenses, relative to its Adjusted Core Earnings revenue. This
Slide 18: Differences Between Core Earnings and GAAP
Differences Between Core Earnings and GAAP Quarters Ended Core Earnings adjustments to GAAP: Mar. 31, Dec. 31, Mar. 31, (Dollars in Millions) 2023 2022 2022 GAAP net income (loss) $111 $105 $255 Net impact of derivative accounting 27 (1) (159) Net impact of goodwill and acquired intangible assets 3
Slide 19: Navient
NAVIENT.